Interest rates cut in UK again

The Bank of England today moved to shield the economy from the US terrorist attacks with its sixth interest rate cut this year.

Rates are now at their lowest level since January 1964 after the Bank’s Monetary Policy Committee (MPC) took the level down to 4.50% with a quarter per cent cut.

The nine-member committee was responding to calls from industry leaders to reduce the cost of borrowing by at least another quarter of a point in an effort to shore up business confidence.

Homeowners are already getting used to the cheapest mortgage rates for more than 40 years after the MPC sanctioned an emergency rate cut two weeks ago.

The latest reduction is likely to result in another £9 being lopped off monthly mortgage repayments - meaning £90 has now been taken off the cost of borrowing since the start of the year.

The outcome of today’s decision had appeared to be on a knife-edge after conflicting data this week.

While the CBI said confidence on the high street remained strong, another survey found activity in the service sector had contracted for the first time in three years.

Many City analysts had expected a ‘‘wait and see’’ approach from the MPC amid fears a cut could cause inflation to go above the government’s target.