Gilt yields have fallen to a record low as the Chancellor indicated that the Bank of England may be set to introduce more monetary stimulus if the country needs it on the back of the spending review.
Speaking on Thursday, Chancellor George Osborne said that the coalition Government had set out a decisive plan to tackle the Budget, but indicated that policymakers at the Bank of England may be set to add to the £200bn of quantitative easing already pumped into the economy.
He said: “This country needs a decisive plan and we’ve set out the decisive plan. It has some caution built into it, there is of course freedom from the Bank of England to deploy monetary tools as well.”
At 8.44am 10-year gilt yields stood at 3.05 per cent, while two year gilt yields stood at 0.62 per cent.
Minutes for the MPC’s October meeting showed that Adam Posen called for further quantitative easing to the tune of £50m.
MPC member David Miles said: “The way we have set monetary policy has been extremely expansionary and we still have these weapons if necessary.
“There is still an awful lot of uncertainty in the global banking sector. There is still plenty of risks and things could turn worse.”