Interest Rates Cut To 2%

The Bank of England's monetary policy committee today cut interest rates by a full percentage point to just 2%,the lowest for 57 years.

The Monetary Policy Committee said it was worried about stalling business investment and consumer spending as well as falling house prices. It added in a statement that the economic outlook remained poor and credit markets essentially frozen. It also said there remained a "substantial risk" of undershooting its 2% inflation target over the next couple of years.

The Bank's move followed interest rate cuts by central banks in Asia and in Sweden, where the Riksbank slashed rates by 1.75%. The European Central Bank is expected to follow Threadneedle Street with a big cut of its own today.

Today's cut means rates have not been so low since late 1951, when they were raised to 2.5% from 2%. Prior to that they had been at 2% for 19 years bar a blip upwards for a couple of months as war broke out in 1939.