New Zealand also announced a record cut of 150 basis points, bringing its rate down to a five-year low of 5 per cent and acknowledging that further cuts would probably be necessary.

Indonesia made a surprise 25 basis-point cut to its rate. This reduction, the first since December last year, takes the interest rate to 9.25 per cent.

Yesterday, the Bank of Thailand cut rates by 100 basis points to 2.75 per cent, partly in response to the recent political turmoil during which the ruling party was dissolved and the Prime Minister forced out of office.

On Tuesday, the Reserve Bank of Australia surprised with a larger-than-anticipated 100 basis-point cut to 4.25 per cent.

But Mr Archer added that: "...it is highly questionable how much of further interest rate cuts by the Bank of England that mortgage lenders would pass on."

Yesterday, Gordon Brown unveiled a rescue package for homeowners who struggle to meet their mortgage repayments if they lose their jobs or suffer a severe drop in income.

Those with loans of up to £400,000 — typically borrowers on upper and middle incomes — will be able to cut payments, with the taxpayer underwriting the risk of default.

The emergency state guarantee, which will enable homeowners to defer mortgage interest payments for up to two years, was announced unexpectedly in the debate following the Queen's Speech yesterday.

The Prime Minister said eight big lenders which account for 70 per cent of the market — HBOS, Abbey, Nationwide, Lloyds TSB, Northern Rock, Barclays, Royal Bank of Scotland and HSBC — had signed up to the £1 billion plan.

Northern Rock, the nationalised lender, yesterday announced that it would follow Royal Bank of Scotland (RBS) in delaying the issue of repossession orders by six months.

RBS announced that it was taking the same measure on Monday.

Money Central: Who do you blame for this financial mess?