The Bank of England has cut interest rates to 5.5% in a bid to boost the UK's fragile economy.

Amid fears that the global credit crunch could spread to the economy as a whole, and concerns over the housing market, the Bank has reduced the rate of borrowing for the first time since August 2005.

But there are concerns that the impact of a rate cut will be reduced by banks raising their own interest rates for both consumers and other financial institutions.

The Bank has previously erred on the side of seeking to control inflation through higher interest rates but has decided the time is now right for a cut.

Inflation is currently 2.1%, slightly above the government's target of 2.0%.