Britain may need further monetary easing policies, including consideration of an interest rate cut to bolster its anemic economic recovery, the Washington- based International Monetary Fund (IMF) said Thursday.
"Bold monetary stimulus has been provided to help counteract the weak economy and rising risks of undershooting the inflation target," the IMF said in a report released Thursday after its recent Article IV annual consultations with the European nation.
Britain's Consumer Price Index (CPI), a major gauge for inflation, fell to 2.4 percent in June, the lowest point since November 2009 and a drop for the third consecutive month.
The Bank of England in late 2011 resumed its purchases of government bonds, or quantitative easing (QE), with additional purchases announced in February and July 2012, according to the report.
Despite the monetary easing, credit conditions remain tight due to factors, including an incomplete process of financial repair and rising bank funding costs associated with intensified stress in the euro area, the IMF said in its annual checkup of the British economy and financial sector.
Earlier this month, the Bank of England announced to further inject 50 billion pounds, about 78 billion U.S. dollars, over the next four months via its QE moves, expanding its QE program size to 375 billion pounds, but left the benchmark interest rate unchanged at 0.5 percent, a record low for more than three years.
The British economic recovery has been "sluggish". Economic activity was projected to gain modest momentum going forward, but the pace of expansion was expected to be weak, said IMF in the report.
Earlier this week, the global lender slashed the projected economic growth rate of Britain this year to 0.2 percent, down from its April estimate of 0.8 percent, while British economic growth pace in 2013 was lowered to 1.4 percent from the previous estimate of 2 percent.