//
Mervyn King, the bank's governor, told a press conference that interest rates could be cut again after they were recently cut by one-third to three per cent, reports AFP.
Mr King also warned that the UK economy could slump by at least two per cent next year.
In a statement, the bank said: "The economy probably entered recession in the second half of 2008 and output is likely to contract further."
Meanwhile, Jonathan Loynes, chief European economist at London-based Capital Economics, said the bank's latest report "shows a significant probability of deflation".
The Daily Mail reports that interest rates could be slashed to zero in the future as the Bank of England struggles to keep inflation under control.
Become an independent investor with the help of Knowledge to Action.
