The Bank of England didn't want to freak anyone out by cutting interest rates from 4.5% to 0% in one fell swoop. So they only cut rates to 3%. A cut to 3.5% had been expected, and the 50 extra basis points of shock'n'awe looks to be helping the market. After early swoons, the futures are inching back up.
From the BoE's statement:
In the United Kingdom, output fell sharply in the third quarter. Business surveys and reports by the Bank’s regional Agents point to continued severe contraction in the near term. Consumer spending has faltered in the face of a squeeze on household budgets and tighter credit. Residential investment has fallen sharply and the prospects for business investment have weakened. Economic conditions have also deteriorated in the UK’s main export markets.
