Interest rate cut to 0.5%

It has also implemented quantitative easing, a method of injecting extra money into the economy as rates get closer to zero. The money supply will be increased by£75bn through asset purchasing.

The cut will have a mixed response from the retail sector. The British Retail Consortium has said that interest rate cuts are only one of a number of issues that needs addressing. It is calling for better access to credit and a boost to consumer confidence as well as a halt to increasing business rates.

BRC director-general Stephen Robertson said: “The key issue is not the cost of credit but its availability. With the bank getting close to running out of road, it’s hard to see what another rate cut now can achieve other than further undermining exchange rates and savers’ incomes.

“The BRC’s Shop Price Index shows shop inflation rising as the cost of importing goes up and UK produce becomes more attractive for overseas buyers, restricting supplies at home.

“Making more money available in the UK economy is the right objective. Businesses and customers need better access to affordable credit, but caution must be exercised. Mishandled, ‘quantitative easing’ could add to inflationary pressure which we’re already seeing from the weak pound.”