What I meant by "pegs inflation" is that they target it, which it looks likes they do.
Here in the U.S., besides the rate cut, there's talk that the Fed lend directly to corporations. The fear is that the rate cut will induce borrowing by banks, but instead of passing the new funds to consumers (and each other), they just hoard the money to shore up their own liquidity.
Oh yes and one thing I forgot to mention is that our £50b bail out package (named by the media) means that the Government will effectively become shareholders of the recipient companies. If dividends then become payable, the Government then has first rights over them. This is with the view that eventually the Government will reclaim their money and that no more banks will become nationalised.
