Interest rates have been cut to 4.5% from 4.75% taking them to their lowest level in more than 18 months.

It is the third cut since August last year and was widely expected given recent sluggish economic growth.

The government has said improving the economy is its biggest priority, but recent figures showed weak growth at the end of last year.

The rate cut will lead to lower mortgage payments for some homeowners, but could also cut returns for savers.