0.5 per cent interest rate cut
Updated on 08 October 2008
Gordon Brown has said the Bank of England's decision to cut interest rates by 0.5 per cent was to "assure people that all action is being taken in the economy".
The Bank of England dramatically slashed interest rates by 0.5 per cent today along with central banks around the world in response to the global financial turmoil.
The snap decision by the bank, a day earlier than expected, came as the treasury announced a £50bn bailout of the banking system.
The bank's half-point cut is the first such move since the aftermath of the 9/11 terror attacks in November 2001.
The prime minister said the cut in the interest rate would "assure people that all action is being taken" to help business.
Gordon Brown said:
"The whole House will want to know that the Governor of the Bank of England has just announced an immediate 0.5 per cent cut in interest rates.
"He has done so in a co-ordinated action that is happening round the world in which the US Fed has cut interest rates by 0.5 per cent, the ECB by 0.5 per cent, the Swiss, the Swedes and other members of the G10 have all cut interest rates showing that global problems are best dealt with by global action."
"Global problems are best dealt with by global action"- Gordon Brown, Prime Minister Questions
It came hours after the government unveiled a half a trillion pound rescue plan for British banks to encourage them to start lending to each other again.
The prime minister called the plan, which involves a £50bn pound fund to invest in bank shares, £200 billion in Bank of England liquidity funding, and £250bn in debt guarantees - bold and far reaching.
Faisal Islam gives his immediate reaction to the news about the interest rate cut, saying the emergency rate cut is "epic news" and is "a four pronged attack designed to kill the credit crunch".