1.5 per cent rate cut stuns City
Updated on 06 November 2008
In a decision that draws gasps throughout the City, the Bank of England reduces interest rates to their lowest level for 54 years.
With Britain heading into recession, a base rate reduction was expected. But no-one had predicted a cut of this magnitude.
Today's 1.5 per cent cut is the biggest since 1981. It sees the base rate come down to 3 per cent, its lowest level since the 1950s.
The bank said drastic action was necessary because of a "very marked deterioration" and "severe contraction" in the economy. It is not yet known whether banks will pass the rate cut onto homeowners.
Interview: Alistair Darling
Channel 4 News asks the Chancellor Alistair Darling if the 1.5 per cent cut is a panic measure and an indicator of the economic crisis.
