Bank of England & ECB cuts rates to fight recession

The Bank of England cut its key rate by an unexpected 1.5 percentage points Thursday to 3 percent, its lowest since 1955. Markets had largely factored in a cut as large as 75 basis points, while most economists had expected half-point cut in anticipation of deep recession. The move by the bank's nine-member rate-setting Monetary Policy Committee follows a decision last month to join in a global round of rate cuts by major central banks.

It is the most dramatic cut since a 2 percentage-point reduction in 1981 and comes after a raft of weak economic data recently. And it is the first time the Bank has cut rates by more than half a percentage point since gaining its independence in 1997.

Later Thursday, the Frankfurt-based European Central Bank slashed its key lending-rate by half of a percentage point to 3.25 percent.