Interest rates in the UK are expected to fall again this week as a measure to bolster the failing economy. The spectre of Deflation is looming in the background.
Howard Archer, chief UK and European economist at IHS Global Insight, said the Bank was "under severe pressure" to cut rates by another half percentage point.
"With GDP suffering its largest drop for nearly 30 years in the fourth quarter of 2008, latest data and survey evidence largely reinforcing belief that the economy is poised to suffer in 2009 the largest single year contraction since the Second World War, credit conditions remaining extremely tight, and a period of deflation highly possible in the second half of this year, the pressure on the Bank of England to act is intense," he said.
The USA is little better of having already reduced rates and awaits the approval of the financial stimulus plan later this month
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