Mr George told a cross-party group of MPs that the Bank's Monetary Policy Committee (MPC) would be as quick to cut rates if circumstances warranted it, as it was to raise them.

"We will be just as active, rigorous, aggressive in pursuing inflation at 2.5% if there is a risk...on the downside as we have been on the upside," he told the Treasury Select Committee.

The committee questioned six MPC members.

The Bank of England is under pressure to cut interest rates again

Three other members were absent, but the six who were present were predictably unwilling to disclose their views on future rate moves.

CBI chief economic adviser Kate Barker said the current gloomy outlook meant rates should be trimmed by half a point at December's MPC meeting.

She said this would underpin consumer and business confidence which have fallen recently, sparking the Bank's quarter point cut in October.

That was followed in November by a further cut of half a percentage point, bringing rates to their current level of 6.75%.

The outlook?

All nine MPC members voted to cut rates last month, with only one dissenting voice - Willem Buiter voted for an even bigger cut of 0.75 percentage points after being a firm advocate of rate increases in previous months.

The Cambridge professor told MPs that the British stock market was at levels that were hard to rationalise, but said that was not enough to make him change his views on interest rates.

He said real interest rates - nominal rates minus inflation - needed to be around 4% at present if the 2.5% inflation target was to be hit.

This implies a floor to rates of around 6.5%, although Professor Buiter said this would change as the economic cycle moved on.

The MPC members admitted that British manufacturers were struggling, but they stressed that monetary policy was set for the whole economy, not just one sector of it.