The Bank of England Monetary Policy Committee (MPC) today slashed the minimum lending rate to 3%. This is the lowest since 1955 and the first time a cut of more than 0.5% has been implemented since Gordon Brown gave it independence in 1997.
Business leaders welcomed the move. An act of desperation to stave of the worst effects of recession. However, the major lenders appeared unlikely to pass on much of the 1.5% reduction.
Meanwhile, despite the business community welcoming the news, the FTSE fell 5.7%.
The reduction in rates is seen as an overt signal that inflation is no longer a threat.
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