Rates slashed to all-time low

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Last Modified: 08 Jan 2009
By: Bridgid Nzekwu

The Bank of England cuts interest rates by 0.5 per cent to 1.5 per cent, the lowest rate since the bank was founded in 1694.

Interest rates in the UK have never been lower. The Bank of England decision to cut the base rate by half a percentage point to 1.5 per cent underlines its concerns about the state of the economy.

But with the bank running out of levers to influence the economy, the prime minister and the chancellor today had to deny growing speculation that there were plans to print more money to ease the financial situation.

The cut was expected by most economic forecasters, but that does not make it any less dramatic.

The Bank of England is administering radical treatment to an economy that is sickening faster than it has done in decades. But is the medicine working?