In December, the Bank of England reduced interest rates by another 50 basis points (a basis point is 0.01 percentage point) after it had cut them by 150 basis points in November. But the rate cut may even be larger. Economists "... expect the Monetary Policy Committee [MPC] to cut rates to 2.5 percent,"...while others "...saw a bigger 75 point cut"...or "a 100 basis point move." Reuters, 11/27/2008
In order to ________, the Bank of England's rate cut must ________.

Question

Quizplus · Accepted Answer

The Bank of England's rate cut is intended to stimulate economic activity by making borrowing cheaper, thereby increasing consumption and potentially increasing real GDP. A decrease in the interest rate reduces the cost of borrowing, encouraging both consumers and businesses to spend more. This does not directly aim to increase long-run interest rates or decrease real GDP.

In December, the Bank of England Reduced Interest Rates by Another