INSTANT VIEW: BoE cuts interest rates to 2.0 percent

LONDON (Reuters) - The Bank of England cut interest rates by one percentage point to 2.0 percent on Thursday, taking borrowing costs to their lowest in more than half a century, amid signs the economy is heading for a deep recession.

Following are reactions from business groups and economists to the decision, latest comments first:

GRAEME LEACH, CHIEF ECONOMIST OF INSTITUTE OF DIRECTORS

"The MPC decision is bold but necessary. The MPC is clearly taking the view that the longer deep interest rate cuts are delayed the worse the recession is likely to become. The MPC still has some ammunition left but not a lot. We can expect further rate reductions early in 2009 but then the MPC will have exhausted its interest rate armory. "

HOWARD ARCHER, CHIEF UK ECONOMIST, IHS GLOBAL INSIGHT

"Interest rates are now down to the equal lowest level since the Bank of England was founded in 1694, highlighting the very serious situation that the UK economy is in.

"We expect the Bank of England to reduce interest rates by a further 75 basis points to 1.25% in January, and would not rule out a larger cut if the economic downturn continues to deepen.

"We now expect interest rates to fall to a low of 0.50% in the second quarter of 2009 and then stay there for the rest of the year. However, it is not inconceivable that interest rates could come all the way down to zero.

STUART PORTEOUS, HEAD OF RBS GROUP ECONOMICS