THE Bank of England's Monetary Policy Committee met for its monthly interest rate meeting this week and surprised the City with a half point cut rather than an expected quarter point cut.

This is its seventh cut this year and brings the rates down to four per cent.

Although Britain is performing relatively well compared with the eurozone and the US, the manufacturing and services sectors are still in a dire state and continued fears of recession appear to have led to the larger cut.

Earlier in the week, the US Federal Reserve slashed US interest rates also by 0.5 per cent, its 10th rate cut this year, in a bid to stave off the US economy's deepening crisis. US rates now stand at a mere two per cent following continued grim economic data.

Latest figures revealed that US unemployment had jumped to a 21-year high.

Economists now fear that rates could be cut further to one per cent or even lower.

British Telecom released its final set of results before its demerger later this month.

The troubled telecoms company revealed a slump in quarterly profits and also that its finance director, Philip Hampton, is to quit by the end of next year.

Its figures were hit badly by the huge one-off cost of its failed Concert joint venture with AT&T.

Although BT did report a profit over the last six months, this was only due to its various business asset sales to reduce its huge debt burden. The disposals included its interests in Japan Telecom and Airtel and also its yellow pages arms in the UK and the US.