How best to fight the recession?

While the cutting of interest rates into 2.5% last three months seems to be not efficiency to the recovery of the economy, now government is considering whether there will be a continuous cut. The main purpose of the government to boost up the economy now is to increase the consumption, investigation and production in the economy. So that, the government expected that with the low interest rates will lead to the rise in the flow of credit by borrowing money and then, boost the economy to go up again. But the debate about which parallel of rates is enough is now a hot topic for economists. Three members of The Times Monetary Policy Committee are calling for a cut into 1 percent, drastic cut over 3 months and this is a level not reached since 1694. But this idea is argued by other members while the large cut last three months just lead to a little effect on the economy. They assumed that increasing the flow of credit can be solved without cutting more rates by issuing a new policy to force banks to lend money with state guarantee. This suggestion reached into the crux problem of the economy because now there is a lending drought that leads to the loss of confidence of many parts in the economy. Mr Pennant-Rea,former Bank Deputy Governor, agreed. “The best option is for the Government to guarantee bank loans, for specified purposes and for a limited period. It is high time the monetary debate concentrated on the banks.