However, already hard-hit savers will see their returns diminished still further.
The Bank said that the global economy was in the throes of a severe and synchronised downturn. Output in the advanced economies fell sharply in the fourth quarter of 2008, and growth in the emerging market economies appeared to have slowed markedly.
Business and household sentiment in many countries has deteriorated. The weakness of the global banking and financial system meant that the supply of credit remained constrained.
In the UK output dropped sharply in the fourth quarter of 2008 and business surveys point to a similar rate of decline in the early part of this year.
Credit conditions faced by companies and households have tightened further, the Bank said. The underlying picture for consumer spending appeared weak.
Businesses have responded to the worsening outlook by running down inventories, cutting production, scaling back investment plans and shedding labour.
The MPC said it welcomed the Government’s latest measures to tackle the problems in the banking system, including the creation of an Asset Purchase Facility to buy high-quality corporate debt and similar assets.
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