Euro-bank follows Bank of England in cutting interest rates

The European Central Bank has announced it is cutting the minimum bid rate at its main refinancing operations to 4.5% from 4.75%, less than an hour after the Bank of England cut its base rate from 5.5% to 5.25%.

The ECB's decision follows a meeting of its governing council. Members have also agreed to cut the rate on its marginal lending facility to 5.5% from 5.75%, and its deposit rate to 3.5% from 3.75%.

It is the third time this year that the Bank of England's monetary policy committee has cut rates, bringing down the cost of borrowing from 6% at the start of the year. Halifax and HSBC immediately announced 0.25% cuts in their variable mortgage rates.

Today's move to reduce interest rates again has been welcomed by analysts as a sensible middle course between keeping rates static or risking market panic with a cut to 5%.