Praise for the Bank of England’s huge cut in interest rates to 3 from 4.5 percent has been widespread.

Economists say it was a bold and aggressive move and the government will now be looking for banks to pass on the reductions in full.

But was it enough? Some forecasters are looking for even more and suggest two or even zero percent could be on the way next year.

What is your opinion of the Bank’s decision?

Bank of England Governor Mervyn King has made his first public speech since the emergency bank recapitalisation programme and several newspapers commented on the change in demeanour of a man who once said his ambition as a central banker was to be boring.

The dramatic events over the past two months since the collapse of Lehman brothers have forced King into the spotlight — like it or not. Being boring is not an option now.

Speaking to businessmen in Leeds, King said the economy is probably entering its first recession in 16 years and that the outlook has not worsened as rapidly as it has in the past month for a very long time.

He called the financial crisis an “extraordinary, almost unimaginable, sequence of events” and added: “We now face a long, slow haul to restore lending to the real economy, and hence growth of our economy to more normal conditions.”

The Daily Telegraph was impressed by the language. “Mervyn King certainly wasn’t pulling his punches in Leeds last night,” it said, adding that the chances of a “quickie” recession are slim.

The Guardian said markets may well interpret his speech as further support for the idea that interest rates could go below 4 percent.

“Why? Well one way to encourage money to flow around the system is to make its price cheaper,” the paper noted. “King, the man accused of being overly concerned about ‘moral hazard’ , suddenly sounds like an arch-pragmatist.”

The Independent called his speech characteristically eloquent but took the opportunity to criticise the bank recapitalisation scheme, of which, it said, King is an admirer, accusing it of being heavy-handed.

“In forcing the banks into much more dramatic capital-raising plans than anyone other than banking supervisors think necessary, the government has ridden roughshod over shareholder rights in a way that doesn’t bode well for the future of the UK economy,” it said.

No one else, the paper said, had followed the Treasury blueprint of part-nationalisation.

“Ignoring  property rights sends out a very bad message indeed about a country’s attractions as a place to do finance and business,” it added.

“The government’s overkill may well have saved the banking system from collapse but it has also helped to destroy confidence in the stock market.”

The Times, however, used the Leeds speech to attack King.

“Mr King’s tenure at Threadneedle Street has been far from boring. It has, however been inconspicuous — and that is an indictment of Mr King’s performance,” it said.

“In the credit crisis of 2007-08, Mr King has been hesitant where he has even been visible. His belated attempts at expounding the Bank’s role, notably in the rescue of Northern Rock, have conveyed querulousness at the perfomance of the government more than calmness in a near-perfect financial storm.”

It praised King for being early and right in realising that the UK’s deposit insurance scheme was inadequate to the scale of the banking crisis implied by Northern Rock’s failure.

“Yet the message during Mr King’s period of office has been too Delphic and muted,” it added. “In the bull market of the late 1990s, Alan Greenspan spoke of “irrational exuberance”. No such telling phrase has crossed the lips of Mr King. What we have learnt is that being boring is no excuse for being invisible. “

Here are just a few of the memorable quotes to emerge from the credit crisis:

If you would like to contribute please send us your own selection in the comments box below, with a link to where you found the quotes.

PRAISE FROM THIS YEAR’S NOBEL ECONOMIC PRIZE WINNER

“The British government went straight to the heart of the problem and moved to address it with stunning speed. Has Gordon Brown saved the world financial system?” – Paul Krugman.

IT TAKES A CRISIS

“Sometimes it does take a crisis for people to agree that what is obvious and should have been done years ago can no longer be postponed”  — Gordon Brown speaking at a Reuters Newsmaker event after announcing the government would put 37 billion pounds of new capital into High Street banks.

LEADERSHIP AT LAST

“I would expect the market will turn around because people have been looking for some leadership and they are finally getting it” - Financier George Soros on the bank rescue package.

LOCAL COUNCILS

“There is no evidence of recklessness by local authorites,” - statement by the British government and the Local Government Association after it was revealed councils had invested some 840 million pounds with Icelandic banks.

PULLING THE CART ALONG

“They’re doing what they can. But it’s like a donkey in the field: you give it lots of carrots but it doesn’t mean it will pull the cart along,” said the head of the rates trading desk at a large bank in London after money markets ignored central bank coordinated rate cuts last Wednesday.

A NEW ERA

“We have now entered a new era for global banking. In return for taxpayers’ money, the state will gain a level of control over their governance, pay, and lending practices,” said Paul Niven, head of asset allocation at fund manager F&C, after Chancellor Alistair Darling first announced a 50 billion pound rescue package for British banks.

NO TIME FOR MORAL HAZARD

“Moral hazard is a concept that nobody can afford when markets are going down at this rate,” Emanuelle Ravano, managing director at Pimco Europe, the world’s biggest fixed income asset investors, said after last week’s co-ordinated rate cuts.

CAPITULATION SELLING

“This strikes me as raw fear, ” said Michael Farr, president of Farr, Miller & Washington after the Dow plunged last Thursday as investors fretted about a global recession. “This strikes me as capitulation selling. You have to clear the sell orders.”

TOO MUCH INFORMATION?

“Investing has become a spectator sport and the daily amount of commentary is unsettling investors, ” said Thomas Russo, partner at Gardner Russo Gardner. “It’s a self-feeding frenzy — you go to sleep and hear Japan is down, you wake up and hear Europe is down then you come in to work and markets here are down. It will go on until values are compelling.”

SHOCK AND AWE

“I guess it’s a shock and awe type move with respect to easing liquidity and improving the current climate,” said Peter Bookvar, equity strategist at Miller Tabak & Co, on the co-ordinated interest rates moves.

NO  RESCUE FOR SOME

“Until the day they put me in the ground I will wonder,” Richard Fuld, the disgraced head of Lehman Brothers, told the U.S. Congress in his first public comments since Lehman filed for bankruptcy protection. “I do not know why we were the only one” that was not rescued.

Bank of England policymakers have held rates steady at 5 percent for a fifth month running.

Inflation currently stands at more than double the central bank’s 2 percent target but any rise in rates to try to choke that off risks aggravating the overall economic slowdown caused by the credit crunch.

Firmly impaled on the horns of a dilemma, most of the the nine-member Monetary Policy Committee, including Bank Governor Mervyn King, thought no change was the best option, given the risks.

What would you have done?

Britain’s second-quarter GDP growth was precisely zero, reflecting the country’s weakest performance since the recession of the early 1990s.

With growth in the services and manufacturing sectors equalling the dismal figures of 2005 and interest rate futures rising, it’s a double whammy, hitting both our pockets and, some would say, our morale.

At the same time, inflation currently stands at more than twice the central bank’s 2 percent target, hampering the Bank of England’s ability to boost growth by bringing down interest rates.

Most analysts do expect it to cut rates and some predict a move before Christmas. Others say it will have to wait longer.

Do you think the Bank needs to act sooner to prevent a full-blown recession of two quarters of negative growth? Just how bad do you think the economic slowdown will be?

Sterling has extended its losses against the dollar to its lowest level in more than two years , trading just above $1.85. As recently as mid-July one pound would buy two dollars and there were plenty of tales of holidaymakers rushing to the United States to make the most of it.

It’s not hard to see why sterling is under pressure, even though inflation is currently well above target and the highest in years: rising unemployment, falling house prices, large trade and budget deficits, and slowing economic growth.

In a gloomy assessment of the economy this week Bank of England Governor Mervyn King said economic growth would be flat for the next year or so and that inflation would rise to 5 percent or above before falling. Economists had thought accelerating inflation would prevent the Bank from cutting rates, but its suggestion that inflation will begin to ease raised expectations of interest rate cuts. Lower interest rates mean investors get lower returns on sterling deposits, which makes the pound less attractive.

Meanwhile, the dollar has been strengthening amid evidence that the slowing economy is a global trend, rather than one limited to the U.S., meaning investors are bailing out of the pound and the euro. The dollar has also gained on the back of falling commodity prices and concern over the eurozone economy.

Just how far the pound will go is anyone’s guess. Citi’s Michael Saunders even predicts there could be a return to the $1.55 level that sterling averaged between 1993 and 2002. “It would not be a surprise to see a return to those levels in the next 12-18 months,” he says in a note to investors.

There are two sides to the falling sterling coin though.

The pound’s fall will hurt holidaymakers who have benefitted from a strong pound when traveling overseas- and make it more expensive for people to buy second homes abroad.

“The U.S. is still cheap, it’s still a good holiday, but it’s a lot more expensive,” says HSBC analyst David Bloom.

But it provides much needed relief for British businesses, including exporters and the tourism industry, whose products and services will become more affordable to customers around the world. With domestic demand weak, a revival of exports could help the economy and limit job losses.

How will a weaker pound affect you? Are you likely to holiday elsewhere now that sterling doesn’t buy as much as it used to in countries that use the dollar?

Battling with the twin evils of soaring inflation and weaker growth, the Bank of England has kept interest rates at 5 percent for the fourth month running.

With the risk of Britain possibly facing its first recession since the early 1990s, the MPC has clearly opted for caution.

But aren’t the prices of oil and other commodities starting to fall? Isn’t the greater risk towards sluggish growth?

Do you think the Bank is being too cautious and should have gone for a cut?

Exactly one year since the credit crunch started retail sales have shown their biggest fall on record in Britain, news that is likely to spur recession talk among consumers, who are already feeling the pinch from rising fuel and food costs.

For sure, the 3.9 percent drop in June was much worse than expected - economists had forecast a 2.5 percent decline - but shop prices are still higher than a year ago and the retail sales data series is notoriously volatile.

That might be enough to maintain interest rates on hold for now. The hawks among the Bank of England policymakers will find reason to remain cautious, no matter whether commentators are fretting that a combination of rising commodity prices, slowing house prices and falling consumer spending may push Britain into recession later this year or in 2009.

Recent minutes from the monthly meeting showed policymakers remain divided over the future path of interest rates as their opinions were split over whether the main threat to the economy comes from the slowdown in spending or from the spectre of rising inflation.

“Overall it underlines the picture of slowing growth and rising price pressures,” HBOS economist Mark Miller said. Vicky Redwood, from Capital Economics, predicted: “We think that spending growth will weaken considerably further, as house prices keep falling and inflation and unemployment rise further.”

More insight will be gleaned from Friday’s second-quarter estimate of economic growth, followed by the Bank of England’s survey of consumer credit and mortgage approvals for June on Tuesday.

Borrowers might be under the cosh, but savers have never had it so good. Historically, when the Bank of England (BoE) base rate changes, mortgage and savings rates follow suit. But amidst the current credit crunch, those with spare cash and prepared to move their money around can take advantage of banks’ and building societies’ eagerness to attract retail funds.

The last time the base rate stood at its current level of 5 percent was 17 months ago — in November 2006. And there are huge differences between then and now in fixed savings rates. The top six-month fixed rate bond is now paying 1.59 percent more interest on a 10,000 pound investment, at 6.86 percent. Kaupthing Edge and Icesave top the best buy tables with that rate, Heritable Bank is close behind with its new offering of 6.80 per cent as of this weekend, and Alliance & Leicester this week issued a fixed rate bond with a competitive 6.83 percent. “With many people thinking  that the base rate is likely to fall further this year some of the fixed rate products available now look outstanding value,” says David Black, principal consultant for banking at financial research company Defaqto.

There is no saying, however, how long the good times will roll for savers, and those looking to take advantage of attractive rates should move quickly. Remember, too, that the maximum protection afforded under the Financial Services Compensation Scheme is 35,000 pounds per financial institution; those with more than that in cash reserves should split their pot between different providers.

In contrast, the credit crunch is continuing to hit borrowers and investors: overall, even those with substantial savings might wind up no better, or worse, off. The FTSE 100 index has dropped 9.32 percent over the past six months, according to stocks and shares Web site ADVFN.com. Its data highlights the extent of the volatility that has been hampering markets. Having opened the year at 6450.9, Britain’s blue chip index dropped to its lowest level of 5338.7 points on January 22 — a long way from its six month intraday peak of 6751.7 achieved on October 15. This equates to a 1413-point move — a 21 percent drop from the index’s high to its low. “There are no two ways about it; we are in a bear market,” says chief executive Clem Chambers. “In markets such as these where the underlying trend is down, strong rallies are commonplace, but the day-to-day weakness overcomes moments of strength overall. Breaking back up through psychological barriers such as 6000, unfortunately, does not mean the good times are back. This is bad news for investors but can be profitable for traders.”

And, in mortgage markets the London Inter Bank Offered Rate (Libor) — the most famous barometer for short-term interest rates in the world — continues to loiter stubbornly high in relation to the base rate. Libor, the rate at which lenders borrow money, determines mortgage pricing for consumers, and is now the “hoodie of the finance world” — symbolic of a fallen system, where banks lack the confidence to step out of their houses to trade with each other — according to independent mortgage broker Charcol.

The BoE’s discussions on the mortgage market will not necessarily improve the situation, according to Andrew Townsley, chief executive of Sheffield Mutual and president of the Association of Friendly Societies. “Even if market conditions improve, mortgage lenders are likely to continue to impose relatively high lending rates on mortgage products and the situation won’t necessarily improve for borrowers,” he warns. “Banks will be tempted to improve profit margins, and although lending rates may come back a little we won’t see them revert to the attractive levels borrowers have experienced over the last few years, for some time yet.”

Savings rates could soon take a turn for the worse, too: ”We can expect to see a drop in attractive saving rates as the situation eases, meaning the consumer remains yet again at a disadvantage,” says Townsley.

Not time to crack open the bubbly yet, then.

Thursday’s cut in interest rates should come as some relief to hard-pressed borrowers, under the cosh from the credit squeeze which has seen lenders raise their rates, cut maximum loan-to-values and tighten lending criteria. Those on tracker rates – that mirror movements in the base rate – will, of course, see a reduction in the amount of interest they pay. Others, though, are at the mercy of their lenders.

A string of high-street names said they’d reduce their standard variable rates following the quarter-point Bank of England (BoE) base rate reduction to 5 percent. That, however, will only partially offset hikes imposed by many of these very lenders in recent times and many commentators argue that the Monetary Policy Committee has failed to go far enough to ease the pain in the mortgage market — and should have acted faster by cutting rates by 0.5 percent.

Nationwide Building Society is raising rates by as much as 0.32 percent on some products and several others — Alliance & Leicester, Chelsea Building Society, Standard Life Bank and Leeds Building Society included — have hiked rates on some of their mortgage products by up to 0.26 percent.

The real problem lies in the gap between the base rate and Libor, the interbank lending rate, which dictates the deals offered to mortgage borrowers: it has ballooned in recent months, despite two cuts in the BoE base — and only a substantial cut in interest rates would have any real impact on narrowing the gap, according to online mortgage company mform.co.uk.

“The crucial factor is the gap between Libor and the base rate; they are massively out of sync and that is dictating terms in the mortgage market,” says chief executive Eamonn Rice. “The 0.25 percent cut will have no effect. The Bank of England has failed to grasp the opportunity to help homeowners and potential borrowers.”