The pound plumbed new lows as expectations mounted that the growing plight of Britain's economy will force the Bank of England to follow the US Federal Reserve in driving interest rates towards zero while taking other extraordinary measures to jump-start stalled growth.

Speculation that the Bank will follow the Fed's lead and cut UK interest rates to unprecedented lows next year was stoked after confirmation that its Monetary Policy Committee unanimously backed this month's full-point rate cut to a record low of 2 per cent.

The record of this month's MPC debate showed that the nine members agreed that “a cut of at least [1 percentage point] was needed”, and that a bigger cut, to below 2 per cent was actively considered in the wake of November's 1.5-point reduction.

Only fears that more drastic action this month would have undercut a vulnerable pound, and risk a sterling collapse, alongside concerns that a surprisingly big rate cut could damage economic confidence, persuaded the MPC to limit itself to a one-point move a fortnight ago. “Markets had priced in a cut of [1 point] and there was a risk that going further could cause an excessive fall in the exchange rate,” the MPC concluded.

Betting in the markets that Britain's official rates will soon follow those of the United States into uncharted territory and that they could fall close to zero next year ratcheted up pressure on the pound yesterday after Tuesday night's watershed move by the Fed to cut US rates to a range of zero to 0.25 per cent.

The pound came under a fresh assault on the currency markets and sank to all-time lows below €1.08 against the euro, while the resurgent single currency scaled new heights just short of 92.8p per euro.

While sterling clung to recent gains against a dollar left more vulnerable by the Fed's dramatic cut in rates, this was not enough to prevent the pound's overall value on its trade-weighted index slumping to a record low at 77.8, down from 79.3 at Tuesday's close.

The dollar, meanwhile, sank across the board, with the euro rising to $1.4326, while the yen hit a 13-year high of Y87.15. The greenback's overall trade-weighted value was last night on course for its sharpest weekly loss in 35 years.

The much-needed boost to the US economy from a weakening dollar making American exports more competitive abroad was emphasised as official figures showed that the US current account deficit narrowed more than expected in the third quarter to $174.1 billion. That came as exports of US goods rose by 2.6 per cent to $346.5 billion (£224 billion) in the quarter.

The Fed's intensified efforts to drive down market interest rates by its new commitment to keep official rates low “for some time”, while buying up huge amounts of American mortgage debt, continued to bear fruit as yields on US Treasury bonds, a key gauge of market rates, continued their slide to record lows.

Yields on 30-year Treasury bond, or “long bond”, tumbled to 2.62 per cent, setting a new all-time low, while the yield on benchmark 10-year Treasury notes also hit another record low of 2.11 per cent.

Despite the Fed's radical measures to try to stave-off a catastrophic slump, the International Monetary Fund stepped up its stark warnings that governments across the West will need to take still more measures to boost their economies.

In a keynote speech at the US Council on Foreign Relations, John Lipsky, the IMF's first deputy managing director, said: “My primary message is that additional, and vigorous, policy action will be needed in order to avoid a serious global downturn.”

His comments came as he predicted that the IMF would be forced to cut still further its already dismal forecasts for global economic growth next year.

“While we believe that efforts to stabilize financial conditions and strengthen demand support measures could still enable a gradual recovery beginning in the second half of 2009, it seems likely we will once again reduce our growth forecast, perhaps substantively,” he said.

Early last month, the IMF sharply cut its projections for world growth next year to just 2.2 per cent, below the 2.5 per cent threshold seen as the threshold that defines global recession.The fund said that it expected that the world's developed economies confronted their first collective full-year contraction since the Second World War.

But Mr Lipsky criticised actions taken so far by governments and central banks as having “tended to be partial, rather than comprehensive”. “Thus, it is not surprising that the downturn in credit growth shows no sign of ending,” he said.

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