Investment Property News - Bueno Investments Limited

The Bank of England should cut interest rates gradually despite the risks to the economy, a leading figure has said.

Paul Tucker, the BoE's executive director for markets, said the risk of inflation prevented the central bank from lowering the base rate sufficiently to completely offset the impact of deteriorating credit conditions.

As a result, central bank policy would be to "offset some but not all" of the credit crunch's impact - indicating that rate setters are treading a fine line between keeping inflation in check and protecting the economy as a whole.

Meanwhile in the United States, Ben Bernanke, chairman of the Federal Reserve, has admitted for the first time that a recession is "possible".

He told a committee in Congress that the US economy will not grow much, if at all, during the first half of this year and "could even contract slightly".

Although Mr Bernanke said he hoped inflation would moderate in coming quarters, he acknowledged that high energy prices had clouded the inflation outlook.

"We are fighting against the wind," he said.

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