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Thursday, December 4, 2008

Breaking News: BoE Cut Rate Into the Lowest Level Since 1939

By Natasha Brereton Of DOW JONES NEWSWIRES

The Bank of England slashed the U.K. Bank rate Thursday by 100 basis points to 2.0% in a dramatic attempt to buoy up the ailing U.K. economy.

The last time the BOE's key rate was cut to this level was in October 1939. It has never been lower since the central bank was founded in 1694.

Thursday's reduction reflects the severity of the deterioration in the economic outlook, and follows a 150 basis point cut in November and a 50 basis point decrease in October in coordination with other major central banks.

A majority of economists surveyed by Dow Jones Newswires had expected a full-percentage-point cut, while investors were fully pricing in a 150-basis-point decrease ahead of the announcement.

The move by the BOE marked the latest in a succession of aggressive rate cuts by central banks, as they attempt to support their ailing economies.

Sweden's Riksbank cut its key policy rate by 175 basis points to 2% Thursday, marking its biggest rate reduction since 1992, while the Reserve Bank of New Zealand cut its Official Cash Rate an unprecedented 150 basis points to a five-year low of 5%.

The Reserve Bank of Australia and the Bank of Thailand also made 100 basis point rate cuts earlier this week.

The European Central Bank is expected to announce a 50-basis-point reduction later Thursday.

-By Natasha Brereton, Dow Jones Newswires; +44 20 7842 9254;


(END) Dow Jones Newswires

04-12-08 1200GMT

Copyright (c) 2008 Dow Jones & Company, Inc.

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