The Bank of England's monetary policy committee has bowed to city fears over the US economy and cut interest rates by a quarter point to 5.5 per cent, with hints that further cuts are expected before June.

Continuing doubts about the strength of the American economy and the impact of the foot and mouth crisis played a significant part in the decision.

The committee held rates at 5.75 per cent last month, following a quarter per cent cut in February. It has since come under sustained pressure from manufacturing industries which are expecting to bear the brunt of a US-led global down-turn.

Mortgage rates fell to their lowest level for 36 years as the country's banks and building societies followed the cut. Halifax, the UK's largest mortgage lender, cut its variable mortgage rate form 6.75 per cent to 6.5 per cent.