The Bank of England cut interest rates by half a percentage point to a record low of 1.5 per cent this afternoon as it battles to keep Britain from falling into a deep and lasting downturn.
Financial markets had been almost evenly split in pricing in a cut of either 50 or 75 basis points and analysts say another reduction next month looks a sure bet and that interest rates could fall below 1 per cent.
Rates never fell below 2 per cent, even during the Great Depression of the 1930s, and they are now at their lowest level since the central bank was founded more than 300 years ago.
The severity of the current downturn has caught policymakers on the hop. They have cut UK interest rates by a total of 3.5 percentage points since October.