Australian dollar eases off slightly against sterling

The Australian dollar eased off slightly against sterling yesterday, as the BoE cut rates by 50 basis points, to a record low of 1 percent. The decision generally met market expectations but investors continue to remain nervous over the economy and the state of its financial system. Analysts are now pricing in a further rate cut from the BoE in March. However monetary easing, as a tool to stimulate the economy, will have less effect the closer rates head toward zero. Investors therefore continue to remain alert to possible alternative measures being used such as quantitative easing. This would involve flooding the banking system with money to keep official rates low and help shore up the financial systems.