LONDON - The Bank of England has slashed its benchmark interest rate by 1.5 percentage points to three per cent.
The European Central Bank followed today by cutting its policy rate by half a point to 3.25 per cent.
The cut by the British central bank exceeded expectations and is its steepest reduction in 15 years, reflecting the dire situation facing the U.K. economy.
House prices are falling at a pace not seen since the last market crash in the early 1990s recession, manufacturing has posted its longest stretch of decline in almost 30 years and unemployment is expected to rise significantly.
The cut follows a half-point cut last month when the British central bank took co-ordinated action with six other central banks including the Bank of Canada.
The Swiss National Bank also cut its key interest rate today by half a percentage point to two per cent, only its second reduction since March 2003.
The Swiss central bank said its move comes as the global economic outlook has deteriorated more severely than anticipated, which will impact growth in Switzerland.
It says it acted because signs indicated that the Swiss economy might contract in 2009.
The bank most recently cut the rate a quarter-point Oct. 8.
