The Bank of England cut interest rates for the first time in more than two years today, after a week of feverish speculation over whether it would act to shore up economic growth in the face of the global credit crunch.
The Bank said it had cut its key rate by a quarter percentage point to 5.5%.
Most economists polled had expected the BoE to wait until about February before bringing rates down.
Policymakers have been concerned about rising inflationary pressures as the cost of food soars and oil prices neared $100 a barrel, although they have dropped back in recent days.
However, many banks had since torn up their forecasts of no change this week and plumped for a quarter percentage point cut. This followed a big fall in house prices, a slowdown in the service sector and signs that US policymakers are getting more worried about economic growth.
The decision had been almost too close to call and financial markets over the week have priced in a 50-80% chance of a cut.
Attention will now focus on publication of the minutes of the Monetary Policy Committee's meeting in a couple of weeks to see how many members voted for a cut. David Blanchflower and Deputy Governor John Gieve who voted to cut last month are expected to have repeated their call.
