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The Bank of England (BoE) will look beyond conventional monetary policies to stimulate the economy, it warned yesterday.
Speaking in Nottingham, Mervyn King, BoE governor, conceded that 2009 would be a difficult year for all and may require more than just lower interest rates to combat the worsening economic environment.
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"With [the] bank rate already at its lowest level in the bank's history, it is sensible for the Monetary Policy Committee to prepare for the possibility – and I stress we are not there yet – that it may need to move beyond the conventional instrument of bank rate and consider a range of unconventional measures," he said, according to today’s The Sydney Morning Herald.
Such measures would take the form of the central bank buying a range of financial assets to boost the money supply and increase available credit to companies, Mr King explained.
The BoE cut the benchmark lending rate to 1.5 per cent this month and a further reduction of at least 0.5 per cent is expected when the committee meet again next month.
