Dollar falls on Fed rate cut

The dollar has fallen against other currencies after the US Federal Reserve cut its key interest rate to a record low in recent days.

Some sector analysts expected the Fed to reduce the base rate of interest to 0.5 per cent. In fact, it was reduced to 0.25 per cent.

The Fed said it made its decision to reduce the rate based on deterioration in labour markets, as well as a decline in consumer spending, industrial production and business investment.

In other foreign currency exchange news, the sterling fell to a further record low against the euro in the midst of expectations that the Bank of England's monetary policy committee (MPC) may reduce its own interest rates further.

The Bank's current rate of interest stands at two per cent after it was reduced by one percentage point on December 4th. The MPC's next decision is due on January 8th 2009.