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ECB cuts rate
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November 8, 2001: 7:51 a.m. ET
ECB, Bank of England cut rates
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LONDON (CNN.com) - The European Central Bank has cut its interest rate by half a percentage point to 3.25 per cent.
The move came shortly after the Bank of England announced it had also cut interest rates by half a percentage point to 4 percent.
The cuts were widely expected by analysts, coming after the U.S. Federal Reserve's similar move on Tuesday.
The Federal Reserve cut half a percentage point off its key interest rate bringing it to two percent.
The ECB said it cut its key minimum bid rate by 50 basis points to 3.25 percent, the lowest level since February 2000.
The Bank of England cut is the seventh this year by the Bank's Monetary
Policy Committee and the first time it had moved its key lending
rate by more than a quarter point since February 1999.
The cut takes the bank's key repo rate to a 37-year low of 4.0 percent, in an aggressive attempt to steer the country away from recession.
Industry leaders had called on the MPC to cut rates by a half-point but most economists had expected a more cautious quarter-point move given the UK economy's relatively robust performance this year.
The MPC, in a statement issued after its regular monthly rate meeting, said world economic activity had weakened by more than it had previously thought and a half point cut was necessary to hit its inflation target.
Britain recorded a 0.6 percent economic growth rate in the third quarter and is on course to the best performer within the Group of Seven industrialised nations this year.
However, recent data and surveys have highlighted the fact that Britain's economy is not isolated from the world economy.
"This was the decisive move that business wanted to give our economy a much-needed shot in the arm," Digby Jones, Director-General of employers' group the Confederation of British Industry, told Reuters.
"The global slowdown has put UK manufacturing in recession and is now spreading to the service sector. We are seeing early signs that strong growth in consumer spending has slowed and that consumer confidence is flagging," he added. 
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