The Bank of England has reduced interest rates to 1% making this the fifth interest rate cut since October 2008.
The decision comes after official data showed the UK had entered a recession in December after two quarters of shrinking economic growth.
What does this mean to you? Do you have a question about interest rates?
As the downturn continues, the BBC's Business and Economics team will be answering some of your questions.
Here the BBC's economics editor Stephanie Flanders, Tim Weber business editor of the BBC News website, and BBC personal finance reporter Kevin Peachey tackle a selection of your questions about savings, sterling and inflation.
Send us your questions
I'm just about to move home. Should I lock in a fixed price for my utilities now or wait a few months?
Melinda, London, UK
Domestic gas and electricity prices are expected to fall in the next few months - although this might have been delayed slightly owing to the dispute between Russia and Ukraine.
Some of the big six UK energy suppliers - which buy supplies in advance - have already signalled an intention to drop prices. Commentators have suggested, for example, that falling wholesale gas prices at the end of 2008 should justify a 15% fall in a domestic customer's bill.
But you might decide that the certainty of a fixed rate, if you can find a good deal, makes it easier for you to keep to a budget during the downturn.
Some off-mains and prepayment meter customers should have seen some falls in prices recently.
With all that has been done to support the banks, does losing our savings remain a real risk?
Mike Roberts, UK
Don't start putting your savings under your bed. The Financial Services Compensation Scheme covers your first £50,000 savings in UK banks, building societies and credit unions per person per institution. The government says this covers 98% of accounts, and its actions so far have suggested it would guarantee savings above this figure.
If a UK bank goes bust the compensation for depositors would come from compulsory levies on the UK's financial services industry.
If the doomsday scenario occurred of all the banks potentially going under, then the government could theoretically nationalise them all and restructure them - probably causing the national debt to rocket. A less politically acceptable theory would be to sell the savings side of these businesses to banks overseas.
Surely it's only those who want to keep overvalued assets high in price or who have borrowed too much that lose out to deflation?
Rob Henwood, London
You are quite right that deflation affects different people differently - in fact, some say that Japanese governments were able to survive a long period of deflation in the 1990s because there were so many Japanese pensioners, on fixed incomes, who found their money stretched further when prices were going down.
Equally, as you suggest, you can have quite long periods where prices in a given sector - eg clothing - are going down, without any bad effects.
But a sustained period of falling prices, across the board, can be extremely damaging for the economy, and very hard to get out of, because people don't buy something today if they think the price will be lower tomorrow.
The result for Japan was a "lost decade" of very little growth. That is why the Bank of England will do everything it can to prevent deflation from getting entrenched.
I work for an American company who pay me in US dollars. Is sterling expected to continue to fall? What are the main drivers of the rate?
Economists are even worse at predicting currency movements than they are at forecasting movements in the economy. But there are several factors helping to push down the British currency at the moment, most of which will be present for some time.
One is the weak state of the economy, and the authorities' likely reaction if things continue to deteriorate.
With official interest rates already (almost) as low as they can go, investors increasingly expect the Bank of England to resort to "unconventional" policies to boost the economy, including, in effect, printing money.
If those measures worked, that could push up inflation, which would lower the value of UK assets, although that is a lot of "ifs". Another factor weighing on the pound is the rocketing level of UK government debt. Some investors are selling the pound because they are worried about how, and when, the government is going to pay it back.
That worry risks becoming a self-fulfilling prophesy because a falling pound actually makes it harder to pay back the debt because a lot of it is denominated in foreign currencies - although of course, other countries are facing problems of their own. Sooner or later, sentiment will probably shift back in favour of the pound - but few economists are predicting that will happen soon.
When do experts predict the economy will pick up?
Nacima Bentayeb, London
There is an old joke: put five economists into one room and you'll get six forecasts. Nobody quite knows when this will be over. Optimists predict that the economy could grow as early as the last three months of 2009, pessimists believe we have to brace ourselves for two full years of gloom.
The reason for the uncertainty: in the globalised world there are so many factors that can knock an economy sideways - commodity prices, emerging economies like China, the credit crunch, exports, consumer confidence, house prices and many more - they could all help or hinder the upswing.
What are the normal first indicators that a recession has ended?
Mr A.Paterson, Leeds
The end of a recession is difficult to spot. Technically it ends when the economy is growing again, but most recessions are followed by a long period of very low growth. So people will still feel the pain, and in most cases the gloom outlasts the start of the recovery. Have a look at the following excellent article on how quickly the UK economy can recover.
Click to read the article
We're told deflation is a problem, and yet we're also told that if the government printed money it would create inflation which is also be a problem. So what is it to be?
Ken Pascoe, Bournemouth
Inflation is good - but only in moderation. It's like a temperature control for the economy and helps to adjust imbalances in supply and demand for goods and services. However, too much inflation or no inflation at all (i.e. deflation) are seriously bad, because they spook both consumers and investors and can stop them from shopping and saving and investing, with devastating consequences for the economy. When inflation and growth are just right, economists speak jokingly of a "Goldilocks economy" - neither too hot nor too cold.