UK interest rates cut to record low of 1.5 percent

[January 08, 2009]  LONDON (AP) -- The Bank of England has cut official interest rates by half a percentage point to 1.5 percent, the lowest level in its 315-year history as it attempts to ward off a prolonged recession.

Thursday's cut means British central bankers are moving closer to the limits of conventional monetary policy after trims totaling three percentage points since the beginning of October.

Britain faces its bleakest year since the early 1990s recession. House prices have suffered their worst year on record, the huge services sector is shrinking at a record pace and several major retailers have collapsed as consumers curb spending.

Inflation is expected to fall from 4.1 percent currently to well below the government's 2 percent target, heading toward destabilizing negative inflation.

[Associated Press]

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