2
Feb
Bank 'has more tools to help boost lending'
The Bank of England has tools other than interest rates with which
to seek to boost lending, an economist has stated.
Chief European economist at Capital Economics Jonathan Loynes said
that it is likely the base rate will drop to near zero, at which
point there will be no further scope for using monetary
policy.
Instead, he suggested, the Bank will buy up bonds from both the
corporate sector and the government, adding: "The aim of that will
be to increase the amount of money that the banks have available to
them to lend into the economy."
Such a move will also be aimed at bringing down "longer-term"
interest rates, Mr Loynes concluded.
Any measures that help to increase lending could help first-time
buyers and property investors seeking mortgage finance.
The policy of cutting rates to near zero has already been adopted
in the US, where this week the Federal Reserve decided to maintain
its rate of a range between zero and 0.25 per cent.