The Bank of England today slashed its benchmark interest rate to 3 per cent, reportedly the lowest in over 50 years, a move which will help in enhancing liquidity in the country's financial system.
The apex bank has cut the rate by 150 basis points to 3 per cent. Earlier, it stood at 4.5 per cent.
The rate reduction is reportedly the lowest since 1955.
England's decision to reduce the rate follows similar moves by other developed and emerging economies including the US, India, China, Japan and South Korea.
"The Bank of England's Monetary Policy Committee today voted to reduce the official bank rate paid on commercial bank reserves by 150 basis points to 3 per cent," the central bank said in a statement today.
According to the statement, the past two months have seen a substantial downward shift in the prospects for inflation in the United Kingdom. There has been a very marked deterioration in the outlook for economic activity at home and abroad. Moreover, commodity prices have fallen sharply, it added.
Last month, the Bank of England slashed interest rate by 50 basis points to 4.5 per cent, just hours after the British government announced a momentous pound 500 billion rescue of Britain's banking sector.
In UK, output fell sharply in the third quarter and consumer spending has faltered on account of squeeze on household budgets and tighter credit. The economic conditions have also deteriorated in the UKs main export markets.
