As expected, the Bank of England has cut interest rates by 0.25%. But will it be enough?

Ian McCafferty, the CBI’s chief economic adviser, comments: "The Bank’s own forecast in November suggested that two rate cuts of 0.25 per cent would be required to meet its inflation target in 2009, and this cut brings the base rate down towards a more neutral position. This should help ensure that there is a soft landing to the slowdown now underway."

"Looking ahead though, the Bank must balance the effect that cutting rates while inflation is rising might have on its credibility, with the likelihood that further out the slowing economy will have brought inflation back below the 2 per cent target," he continued.

David Kern, economic adviser to the British Chambers of Commerce, believes the Bank could have done more: "The MPC’s decision to cut interest rates to 5.25 per cent was necessary for the economy. In the face of worsening global and domestic conditions, a refusal to act would have entailed unacceptable risks."

Mr Kern concluded: "The move, though vital to sustain confidence, is not adequate on its own. The recent dramatic rate cuts in the US highlight the importance of early action. Threats to growth are much more acute now than risks of higher inflation, and we would have welcomed a bold UK move to 5 per cent."