Bank of England cuts interest rates

The Bank of England has slashed interest rates by half a percent in an attempt to stabilise the economy and reinvigorate plummeting stock markets.

The surprise reduction, which has been made in conjunction with several other central banks worldwide, now puts UK interest rates at 4.5% - down from 5%.

Meanwhile, the US Federal Reserve and European Central Bank have also announced a 0.5% cut in rates. Canada, Sweden and Switzerland have taken similar action.

The Bank of England’s decision, which had not been expected until later in the month, has been applauded by the business community.

‘This was an essential and timely rate cut which the CBI had called for to help restore business and consumer confidence,’ said CBI Deputy Director-General, John Cridland.

‘We have now seen major steps by both the Government and the Bank of England to support the economy and the financial system. These will be welcomed by business, and will help the economy at a critical time.’