Argonaut's European Income fund manager Oliver Russ, said that a reduction of this size is wholly necessary to 'de-stress' the housing market.
Russ believes that both the BoE and US Federal Reserve should cut rates by 0.5 per cent in December, followed by another -.25 per cent as soon as January.
If the US does slide into recession – something Russ believes the country would be ‘very lucky’ to avoid – he argues that the knock-on effect would be particularly damaging to economically sensitive sectors such as materials and resources.
Russ does not however believe that this level of rate cutting will happen.
He said: “The Bank of England is behaving like the British Governor in Carry On Up The Khyber, who when asked for his response to a crisis replies ‘We’re British – we won’t do anything.
“Confidence could return swiftly but it depends on the Fed and BoE, which need to cut rates hard and fast to unblock the credit system. UK rates are very high by international standards, and the BoE needs to wake up and start cutting.
"In my view, UK rates need to come down by 1 per cent as soon as possible. This would enable the excesses that have built up in the economy to be gradually worked off, rather than undergo a painful and sudden readjustment.
“Even the Bank agrees that cuts might be required, but stated in its minutes that a cut now might look like a panic measure. They should be more concerned with economic reality, not PR.”
