Interest rates have risen five times since the middle of last year, but the Bank had kept rates on hold since July.
Sue Robinson, director of the RMI National Franchised Dealers Association (NFDA), part of the Retail Motor Industry Federation (RMIF) believes that consumer confidence could be slightly buoyed by the cut: "The softening of the housing market has led to consumers reigning in their spending, and what is left is short-term and focused on Christmas. "The high-street slowdown hasn’t yet reached the showroom, but with disposable incomes constricting, it is only a matter of time before new car sales are caught up in the general slowdown. "The cut could help the consumer market remain fluid. Interest rates needed to come down to help consumer confidence."