Bank of England reduces interest rates to 3%

The Bank of England’s Monetary Policy Committee (MPC) has today voted to reduce interest rates by 1.5 percentage points.

This cut to three per cent represents the lowest level of interest rates since 1955 and has been described as a shock move by the BBC.

The decision follows a less drastic reduction from five per cent to 4.5 per cent in October as part of a coordinated move with other central banks and is the biggest cut since 1981.

Such a cut could be good news for self builders who took out a base rate tracker mortgage to help develop their land and dream home.

"The past two months have seen a substantial downward shift in the prospects for inflation in the UK," the MPC said.

In announcing its decision, the committee claimed there has been "a very marked deterioration" in the outlook for economic activity in the UK and overseas.