The UK economy shrank -0.2% in the three months through September according to NIESR, a think tank. This marks the first full quarter of negative growth in 16 years. The accompanying statement sent a blunt message to policymakers: “we take the view that the Bank of England should cut the interest rate by half a percentage point at its next meeting.” Mervyn King and company are set to announce interest rates at 11:00 GMT on Thursday morning. Bond yield forecasts call for borrowing costs to decline 50 basis points in the fourth quarter, though there is no indication whether the BOE will do this at once or in 25bps increments. Yesterday, the markets cheered as the Bank of Australia cut interest rates by a full 100 basis points: Australia’s benchmark S&P/ASX 200 index added about 2% and US equity indices rose an average of 1.3% while Treasuries, the US dollar and the Japanese Yen declined. This sent a clear message to central bankers: cut rates and confidence will return.