The Bank of England has cut the interest rate in the UK by 0.5 percentage points to 1.5 per cent.
It stated that further measures are needed to increase the flow of lending to the non-financial sector.
This is because the availability of credit to both businesses and consumers is continuing to tighten, with investment outlooks deteriorating.
The bank also highlighted that inflation fell to 4.1 per cent in November and it is expected to fall further as "world trade growth this year is likely to be the weakest for some considerable time".
With the global economy experiencing a synchronised downturn, it is likely that both business and consumer confidence will remain low until there are some positive changes.
The Bank of England last reduced interest rates in the country on December 4th by one percentage point.
This followed an even bigger decrease of 1.5 percentage points in November.
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