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In fact, lower rates are slowing things down by cutting government interest payments, and thereby requiring a higher fiscal adjustment.
Brown Says Monetary Policy Is Having Reduced Impact in UK
Jan 27 (Bloomberg) — Prime Minister Gordon Brown said the Bank of England’s ability to influence the economy with lower interest rates is being hurt by the impact of the financial crisis in the U.K. “Our financial system remains under such strain that this will reduce the impact of lower interest rates,” Brown said in a speech in London today. “We have to do more. We took the decision in the pre budget report to launch a major fiscal stimulus. Rather than cutting back on public investment, we have decided to stick to our spending plans.”