Pressure is intensifying on the Bank of England to make a dramatic interest rate cut this month to shore up the economy and curb the spread of the financial turmoil into the wider economy. The CBI and British Chambers of Commerce are calling for a half point cut, as is the Federation of Small Businesses. But the Centre for Economic and Business Research (CEBR) is going further, calling for an emergency rate cut of 1 per cent. It also feels that waiting until Thursday may be a mistake. Instead it is demanding that rates be cut to 4 per cent tomorrow.

But economists say the likelihood of a 1 per cent cut is slim. True, Australia cut its rates by 1 per cent today but its central bank has a dual mandate - to focus on growth as well as inflation. The Bank of England's only mandate is too keep inflation at the 2 per cent target. Given that the rate-setting committee will have a copy of September's inflation figures, which are expected to have spiralled to more than 5 per cent, when it starts its two-day meeting, its ability to make a drastic rate cut will be curtailed. We won't see the inflation figures until next week. However, economists are not ruling out a half-point cut this week, and further cuts in the coming months to bring rates down to 4 per cent by the end of the year.

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