Interest rate slashed to 2%

The Bank of England today cut interest rates by one percentage point, from 3 per cent to 2 per cent - the lowest level in more than half a century.

The move has been welcomed by many commentators who said the cut would help the slowing economy.

It is the first time the rate has fallen to two per cent since 1951.

The interest rate had previously never fallen below two per cent in the entire history of the Bank of England.

A poll of economists for inthenews.co.uk last week showed analysts were split, with only five out of 11 economists predicting a one per cent cut.Before the interest rates decision, the Halifax said its customers with existing tracker mortgages, that follow moves in the Bank of England's Base Rate, would benefit in full from any cuts.

This was despite a clause in the Halifax's paperwork which would have allowed it to put a limit on the cuts it passed on to mortgage customers.

There was further evidence earlier of the rapidly slowing economy.

House prices fell 2.6% in November - their sharpest monthly drop since the housing market crash of the 1990s, according to the Halifax.

According to its latest survey, that increased the annual rate of house price falls to 14.9%.