Seven jurisdictions across the globe, including the Bank of England and the US Federal Reserve, have cut rates as governments and central banks are forced to intervene in the markets.
The interest rate cut comes as the Chancellor Alistair Darling announced plans for a massive bailout of the UK banking system as concerns grow over the health of a number of top UK banks.
It is hoped that the rate cuts will bring relief to smaller businesses looking to raise funds.
Central banks cut interest rates to ease financial crisis
UK interest rates have been cut by 0.5% as part of an international effort to ease the pressure on liquidity in the international money markets.
