The UK economy shrank at a pace of -1.8% in the three months through February according to the [B]NIESR GDP Estimate[/B], the lowest reading for the metric since January 2002. The International Monetary Fund has predicted that the UK will see the deepest recession of all the G7 nations. In an effort to check the downturn, the Bank of England cut rates to a record-low 0.50% and signaled it would pursue quantitative easing. The policy could prove profoundly inflationary and drive down the British Pound if the central bank does not drain the excess liquidity with rate hikes fast enough when the recovery is in sight. The risks are to the downside considering policymakers’ recognition of a rebound tends to lag behind its actual beginning.