Base rate hits all-time low

Date: 8th January 2009

The official interest rate has been cut to 1.5 per cent - its lowest level since the 17th century, the Bank of England has announced.

Following the Bank's monetary policy committee's (MPC) monthly meeting, it was decided that the base rate would be reduced by 50 basis points in a bid to encourage economic recovery.

The rate of 1.5 per cent is a record low for the UK as it has never fallen to this level since the Bank began setting interest in 1694.

Steve Radley, chief economist of EEF, told BBC News: "Whilst the Bank has indicated it wanted to take a measured approach to cutting rates, this is too timid to deal with the current situation."

He added that as it was widely expected the MPC would cut rates to even lower than 1.5 per cent, the question of why the Bank would wait to do this had to be asked.

The base rate has now fallen by more than three per cent since September 2006, when it stood at 4.75 per cent.