Will BoE be forced to cut rates this year?

The Bank of England may have to resort to the interest rate cut that Governor Mark Carney alluded to in his Inflation Report speech this morning, according to some market watchers.

Presenting the latest Inflation Report today, Carney said the Bank "has the will, means and responsibility" to take further action in case deflation persists, including rate cuts and further QE. Though this is not the Governor's base scenario, some commentators believe deflation will be far worse than the bank expects, forcing it to act on its promises. Nick Dixon, investment director at Aegon UK, said: "The threat of deflation, together with sterling's gains against the euro, have created an unexpected challenge for the BoE, and we could see a 0.25% interest rate, and even a reinject...