Chances of further interest rates ‘Slim’

The bank of England has hinted that further interest rate cuts are ’slim’. The Bank of England says the room for further rate cuts is limited as it predicts slower growth and rising inflation.

That could mean fewer interest rate cuts than financial markets expect.

Governor Mervyn King said that “it is the outlook for inflation, in the medium term” that the central bank’s Monetary Policy Committee (MPC) will remain focused on.

Mr King said it was likely that the rate of inflation would hit 3% by the middle of this year, which would require him to write a letter of explanation to the government.

The comments come amid increasing signs that problems in global financial markets, a strong pound, and earlier increases in the interest rates are creating problems for the UK economy.

The Bank cut UK interest rates last week to 5.25% from 5.5% in an attempt to prevent a major slowdown in the economy.