A half-point cut in the Bank of England’s base rate to an historic low has been dismissed as irrelevant by a Kent boss.

The Bank’s Monetary Policy Committee today reduced the rate to 1.5 per cent, its lowest level since the so-called Old Lady of Threadneedle Street was founded in 1694.

Economic experts on the committee responded to what the Bank called "an unusually sharp and synchronised downturn."

It said business and consumer confidence had fallen markedly, and world trade growth this year was likely to be the weakest for some considerable time.

The pace at which the economy was weakening had increased during the past three months and output was likely to continue to fall sharply during the first part of 2009. Consumer spending had weakened, a fact underlined by the spate of retail failures in recent days.

It said further measures were needed to increase the flow of lending and the MPC was worried that there was a significant risk of undershooting the two per cent inflation target at the existing level of Bank Rate.

"Accordingly, the committee concluded that a further reduction in Bank Rate of 0.5 percentage points to 1.5% was necessary to meet the target in the medium term," it said.

But Mike Lazenby, chief executive of Kent Reliance Building Society, based in Chatham, said the decision was irrelevant.

It was unlikely to stimulate lending because there was still a big difference between base rate and LIBOR. the London Interbank Offered Rate at which banks lend to each other.

"It’s completely irrelevant as far as pricing mortgages is concerned because the Bank of England has not impact on the way that mortgages are priced," he said. "Although the PR is good for the Government, until and unless the interbank rate drops, it will make no difference to customers’ mortgages."

Kent Reliance would not make any decisions about rate cuts until next month.

"We have a responsibility to try and keep investment rates as high as we can for people on limited and fixed incomes who rely on income from their investments to pay the rent and buy food.

"Anybody who has a mortgage is usually in gainful employment and it’s only right that people who can afford to pay, should pay. I’m not saying that mortgage customers should not have some reduction but they shouldn’t expect a full reduction."

Other experts called on the banks and other lenders to pass on the rate cut and increase the flow of lending to stimulate the stagnant housing market.