The Bank of England cut interest rates for the first time in two years today, by a quarter percent to 4.5%, after household spending and business investment growth slowed.

But the Bank said in a statement that higher oil prices may raise inflation further in the short-term, while rising equity prices and the recent fall in the Pound should boost future economic growth, signalling another cut is not likely to follow soon.

"The reduction is a move in the right direction, as it will help kick-start the consumer economy, which has been struggling during recent months," said Matthew Carrington, chief executive of the Retail Motor Industry Federation (RMI).