The Bank of England has cut interest rates for the first time in two years today. Rates were cut by a quarter point to 4.5 percent in an attempt to halt an economic slowdown and reinvigorate flagging consumer spending.
The Monetary Policy Committee's first cut in rates in two years comes as growth in the world's fourth largest economy has cooled rapidly. The move was widely expected by analysts and so had little impact on financial markets.
The BoE warned that higher oil prices could threaten to push up inflation in the near term. But it also said that a rising stock market and the recent fall in the pound should boost future economic growth, signalling another cut may be a way off.
"This move represents a bit of economic fine-tuning on the MPC's behalf, with a view to shoring up domestic demand. Rates may fall further yet, but the Committee will not be in any great hurry," said Andrew McLaughlin, chief economist at the Royal Bank of Scotland Group.
The cut in borrowing costs - decided at the 100th meeting since the MPC's inception - came as little surprise as four of the nine members had already voted for such an easing in July.
Most analysts also expect the BoE's quarterly Inflation Report, to be published next week but available for use at this week's policy meeting, will show lower growth forecasts than those made just three months ago.
Separately, the European Central Bank left its base interest rate unchanged at 2 percent, where it has remained for more than two years.