Bank Of England Slash Interest Rates

The Bank of England has reduced interest rates today by 1.5% to 3%, which is the biggest cut for 53 years . The decision was welcomed by the construction industry and housebuilders, as well as wider business interests, who only expected 1% rate cut.

In a statement the bank said: “The past two months have seen a substantial downward shift in the prospects for inflation in the United Kingdom. There has been a very marked deterioration in the outlook for economic activity at home and abroad.”

It also said that, despite inflation currently residing at 5.2%, there was a significant risk that, with oil prices plummeting, inflation would fall below its 2% target next year.

Chancellor Alistair Darling insisted it was "essential" that banks pass the cut on to customers."I think it's essential that the banks do pass on the benefit of lower interest rates to people and to businesses," he said.