The past two rate cuts saw little reaction from lenders, with nearly one in five failing to pass on December’s interest rate cut a month later, while others reduced their rates by just 0.15 per cent.

Inflation rose to 2.5 per cent in February, but even if commodity prices remain at their current high levels, the Bank of England said inflation should fall back later this year.

In a statement following the rate cut, the Bank explained the balancing act it faced to keep inflation on track for 2 per cent over the medium term.

It said: “On the upside, above-target inflation this year could raise inflation expectations so that, in the absence of some margin of spare capacity, inflation would remain above the target.

“On the downside, the disruption in financial markets could lead to a slowdown in the economy that was sufficiently sharp to pull inflation below the target.”

It said the balance of these risks to the inflation outlook in the medium term justified a cut in interest rates this month.

The Bank added: “Credit conditions have tightened and the availability of credit appears to be worsening.

“While the recent depreciation in sterling will support net exports, the prospects for output growth abroad have deteriorated.

“In the UK, business surveys suggest that growth has begun to moderate and that a margin of spare capacity will emerge during this year. This should help to keep domestic inflationary pressures in check in the medium term.”

Yet is this cut in interest rates enough? Are homeowners going to actually feel the effects this time?

Have YOUR say...