The Bank of England cut its benchmark interest rate to 1 percent from 1.5 percent Thursday in its latest effort to spur lending, while the European Central Bank decided to leave its main rate unchanged at 2 percent.
The British central bank issued a statement explaining that its fifth rate cut since October was needed because "the global economy is in the throes of a severe and synchronized downturn."
In the U.K., the bank said, "Credit conditions faced by companies and households have tightened further. The underlying picture for consumer spending appears weak. Businesses have responded to the worsening outlook by running down inventories, cutting production, scaling back investment plans and shedding labor."The rate cut establishes a new record low for the three-hundred-year-old bank.