Britain's leading share index surged above 5,000 points this afternoon for the first time since the September 11 attacks on the US, boosted by a Bank of England rate cut. The FTSE, which had stood 5,100 before the attacks on the World Trade Center and the Pentagon, had retreated to around 4,220 the following week.
The Bank of England today cut interest rates for the sixth time this year - and the second since the attacks on September 11. Rates are now at their lowest level since January 1964 after the Bank's Monetary Policy Committee took the level down to 4.5% with a quarter of a point cut.
A majority of economists had expected the Monetary Policy Committee to make its sixth rate cut this year, adding to the one it made on September 18 as central banks around the world slashed borrowing costs to try to limit the economic impact of the US attacks. A half-point cut by the US Federal Reserve on Tuesday, taking rates there to just 2.5%, had also heightened expectations the BoE would also cut again.
The MPC issued a statement after its regular monthly rate meeting saying that while the impact of the attacks on the British economy was likely to be less than on that of the US, it was concerned about confidence here.
'The weaker world outlook and increased uncertainty have set back UK business and consumer confidence, and may, for a time, restrain business and household spending,' it said.
