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The City has warmly welcomed today's cut in UK interest rates to 2% by the monetary policy committee (MPC), taking them to their joint lowest level in the Bank of England's 314-year history.
Stephen Robertson, director general of the British Retail Consortium
"This is exactly the type of decisive action we need during these uncertain times. With the threat of inflation fading, the Bank of England is right to concentrate on jump starting the economy.
"Decisions now will greatly influence how long and deep the recession is."
David Kern, chief economist at the British Chambers of Commerce
"We are pleased with the MPC's decision to cut interest rates by 1%. The less than impressive reaction to the pre-budget report, and worrying signs that UK activity is falling sharply, make it critically important for the MPC to persevere with aggressive rate cuts. The UK economy faces serious risks.
"There is a clear danger that unemployment will increase even more dramatically without urgent counter measures. We strongly urge the MPC to cut interest rates by at least a further half per cent at its January meeting."
Stephen Gifford, chief economist at Grant Thornton
"Under intense pressure from all angles including the manufacturing industry, financial services sector, retailers and banks, the Bank of England has had no option but to continue slashing interest rates. Today's 1% cut is no surprise as the Bank of England works frantically to put the economy back on a steadier albeit slow and uncertain road.
"It will take many months before the full effect of the last few month's dramatic cuts feed through to consumers and help steer the UK economy out of what is predicted to be a long and deep recession. These interest rate cuts, combined with last week's massive fiscal injection by the chancellor, are the first steps on the way to restoring much needed confidence but the economy still has a long way to go."
Brendan Barber, TUC general secretary
"This decision was spot on. The Bank of England could not be clearer about what it expects the high street banks to do.
"The government must now pull every lever of influence to get banks lending. If that doesn't work, radical measures will be needed straight away. The alternative is a wave of bankruptcy and redundancy."
Liam Bailey, head of residential research at Knight Frank
"This cut is unlikely to have any immediate effect on the housing market, although it may tempt some buyers to make a decision. Prices will continue to fall into 2009, and we believe they have a further 15% to fall. However, by limiting the extent to which the economy contracts, and minimising the level of business failure and job losses, the cut will help to prevent a more serious slump from occurring.
"Much depends on whether the new rate is passed on to borrowers. Libor [the inter-bank lending rate] has decreased in recent months but remains highly volatile. Until it stabilises, lenders will resist reducing rates or increasing mortgage availability, although pressure from the Financial Services Authority is likely to increase."
Michael Coogan, director general of the Council of Mortgage Lenders
"Lenders want to help their borrowers, both those who are in difficulty and those who are not. This will help to support the wider economy and ultimately strengthen their businesses too.
"But the practicalities are complex, and lenders are trying to achieve a range of potentially conflicting objectives at the same time. They are simultaneously trying to build up greater levels of capital and liquidity, help borrowers in difficulty and reduce repossessions, keep rates as low as possible for borrowers and as high as possible for savers in a very low interest rate environment, support new lending, and pay the significant costs of the recapitalisation scheme which have fallen across a wider range of lenders than just the recapitalised banks themselves."
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors
</p>"Households and business will take some comfort from today's bold move by the BoE, which is a much needed response to the dramatically worsening conditions across the whole economy. However, in our opinion, it will not on its own be sufficient to bolster confidence given the scale of the current financial crisis."
Howard Archer, chief UK and European economist at IHS Global Insight
"Deepening recession, ongoing dangerously tight credit conditions and sharply retreating inflationary pressures fully warranted the Bank of England slashing interest rates by a further 100 basis points from 3% to 2%, and we strongly suspect that the MPC's job is far from done yet.
"There currently seems little likelihood that matters will improve any time soon, despite the government's fiscal stimulus package. Very tight credit conditions remain a particularly serious problem.
"We expect the Bank of England to reduce interest rates by a further 75 basis points to 1.25% in January, and would not rule out a larger cut if the economic downturn continues to deepen. We now expect interest rates to fall to a low of 0.5% in the second quarter of 2009 and then stay there for the rest of the year. However, it is not inconceivable that interest rates could come all the way down to zero."
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