The Bank of England cut interest rates by half a percentage point to 1.5 percent on Thursday - its lowest rate since the bank was created in 1694 - as it aims to stave it off a deeper economic slump.

This is the bank’s fourth rate cut since October to try to strengthen the worsening economy. However even in the midst of the 1930’s Depression, rates never fell below 2 percent. In the United States, rates now range between 0 and 0.25 percent.

The bank said that while the fall in sterling, and recent tax and interest rate cuts would improve activity in 2009, there was still a risk inflation would collapse below its target unless rates came down from 2 percent.

Economists believe the BOE is likely to further cut rates next month and forecast the new rates could fall below 1 percent, at least by the second quarter of this year, Reuters reports.