Zero growth forecast as base rate cut is ruled out

The Bank of England has warned that the economy will flat-line this year, but said that a cut to the base rate was the wrong way to kick-start growth. The Bank of England has reduced its growth forecast to zero for this year after its previous forecast of 0.8%, but ruled out calls for a rate cut from the already historic low of 0.5%. Sir Mervyn King says that the risks of lowering base rate outweigh any benefits and that any rate cut would damage some financial institutions. A year ago inflation was rising and heading towards 5% but it has now fallen to within sight of the 2% target. Inflation is currently 2.4%. August 10, 2012