A rate cut tomorrow would not benefit the UK economy and the Bank of England should instead get on with buying up corporate debt, according to an influential think tank.

The National Institute of Economic and Social Research said that a reduction in the Bank Rate would not sort out the problem of high corporate bond yields which it believes is at the heart of the recession as companies struggle to access credit.

Economists are expecting the Bank’s Monetary Policy Committee to slash rates by half a percentage point to a new all-time low of 1% when its two-day meeting concludes tomorrow – a move described as irrelevant by Ray Barrell, a senior research fellow at NIESR.

Daily Telegraph