Breaking with its recent more cautious tone on interest rate movements, EEF believes the Bank of England should cut rates again in the face of tighter credit conditions, weakening of activity and a poorer international outlook. Falling confidence in financial markets is widening the spread between the base rate and money market rates, undermining the impact of previous rate cuts.
Commenting, EEF Chief Economist Steve Radley, said:
"With growing evidence of problems in the financial sector spilling over into the wider economy, the UK needs a stimulus from monetary policy. Rising spreads between the base rate and money market rates have wiped out the benefits from the previous two rate cuts. The Bank must now act pre-emptively to limit contagion from the financial markets spreading elsewhere."
ENDS