The Bank of England today trimmed its key interest rate by a quarter-point to 5.25% amid concerns of slower economic growth while keeping a close watch on inflation.
The British central bank said in a statement that its rate-setting Monetary Policy Committee needed to balance the risk of a 'sharp slowing in activity' against the danger of rising inflation.
The BoE's second cut in three months follows moves by the US Federal Reserve to slash a total of 1.25 percentage points off its key rate in January amid worries that the US could be headed for a recession.
The BoE's main job is to keep British 12-month inflation close to a government-set target of 2%. Inflation was unchanged at an annual rate of 2.1% in December.
The bank had trimmed interest rates in December for the first time since August 2005 in a bid to combat slower economic growth hit by an ongoing global credit squeeze.
'The prospects for output growth abroad have deteriorated and the disruption to global financial markets has continued,' the Bank of England said today.
Meanwhile, the ECB kept its key interest rate steady today at 4%.
