News Article - 07 November 2008
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The Bank of England has cut its base rate to three per cent, its lowest value in over 50 years, in a bid to help business growth.

At 1.5 per cent, the cut itself is the largest since a two per cent reduction in March 1981, while the rate has not been as low since 1955.

It follows an earlier cut last month, of 0.5 per cent, which took the rate to 4.5 from five per cent.

The Bank's Monetary Policy Committee explained that a "significant reduction" was needed to that the medium-term CPI inflation target of two per cent could be met.

Richard Lambert, the director general of the Confederation of British Industry (CBI), said the cut was a "bold and welcome move" and was in line with what his organisation had been asking for.

"Business and consumer confidence has been deteriorating sharply in recent months, and recession has replaced inflation as the major threat to the economy over the next year or two," he said.

"This cut of one and a half percentage points should help to ease conditions in the credit markets, and allow banks to pass the benefits on to their customers."

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