The Bank of England has cut interest rates to 5.25% from 5.5% as it looks to stem a downturn in the UK economy.
The decision, announced this morning, follows cuts in the US where the Federal Reserve cut rates from 4.25% to 3%.
It is the second cut of 0.25% made by the bank in three months after rates were cut from 5.75% in December.
The decision was backed by some in the UK property market but James Thomas, director of residential development and investment at Jones Lang LaSalle said it would not 'rejuvenate' the property market.
He said: 'A measured easing will not rejuvenate the market. However, quality property will be well supported in today’s market, where the labour market remains in good health and where, in the main, there is a shortage of supply in new homes.
'There are, however, downside risks in a number of regional markets. Across the UK, we are heading for stagnant prices in 2008, but in prime markets the start of the year has been cautiously optimistic. This implies that while financial uncertainty is weighing on decision making and price growth, it has not discouraged activity in the top markets.'
However, the cut was some relief to others in the industry.
Stephen Stone, chief executive of Crest Nicholson, said: 'There are admittedly worries about upward inflationary pressure, but it’s encouraging to note that the MPC has strived to maintain a level of stability.
'It would have been a mistake for the UK to replicate the more aggressive 1.25% Federal Reserve policy, and today’s cut will instead result in a more realistic balance.'
Howard Cooke, GVA Grimley's corporate consultancy director, said: 'A quarter point reduction is a measured approach of trying to keep the economy growing but without adding to the inflationary pressures that have been causing so many problems for the Bank of England.’
‘It also shows that the Bank is concerned about the slow down in the economy which is now manifesting itself in many ways.'
Paul Guest, director of research at Jones Lang Lasalle said: ‘Household economic conditions have deteriorated in recent months, with consumer confidence dipping to its lowest since the mid-1990s. In particular, the index measuring spending intentions has been in retreat, while the retail sales results over Christmas were, broadly speaking, disappointing.’
‘Furthermore, house price growth is in retreat and new mortgage approvals continue to slump – this is generally an indication of a further cooling in asset price growth.
'Faced with the probable downdraft on consumer confidence created by sustained interest rates, the Bank of England likely opted to favour economic steadiness over price growth risks.’