This would be the first time since the Bank was founded in 1694 that rates have fallen below 2%.
It comes as the Treasury denied reports it was planning to inject more money. Treasury sources said that while the move had not been ruled out, it was not currently on the agenda. Hetal Mehta, economic adviser to the Ernst & Young Item Club, said the Bank was facing “a balancing act”. “Six months ago, it was juggling slowing economic growth with soaring inflation,” she said. “But now the Bank has to tread a fine line between avoiding deflation and a further weakening of sterling, whilst doing all it can to soften the impact of the recession.”