Interest rates are ready to tumble again after Christmas, according to City experts. 

The Bank of England interest rate stands at 2% - the lowest since 1951. 

The 58 economists, polled by news agency Reuters yesterday, feel the rate will fall to 1% by March, and will stay there until 2010 before rising again. 

Any cut below 2% would set rates at a level never seen since the Bank of England opened in 1694, and markets are pricing in rates falling to a trough of 1% by June. 

Forty of 50 economists in the poll saw the bank's next move coming in January, with 35 of them forecasting a more modest interest rate cut of 0.5% to 1.5%. 

Until recently, the Bank of England could not cut interest rates as inflation was running at more than double its 2% target. 

Data released last month confirmed the British economy shrank 0.5% in the third quarter, the first decline in 16 years, after stagnating in the second quarter. 

Recent data suggest the UK is now in recession, usually defined as two consecutive quarters of economic contraction. 

Figures earlier this week about the UK's manufacturing and service sectors suggested the economy might have contracted more sharply in the final few months of this year than in the third quarter. 

Many are now worried that inflation may undershoot the 2.75% target and some are even concerned about the threat of deflation.  

Economists see deflation - a sustained fall in prices - as a nightmare scenario where economies slump as consumers and firms hold back on spending hoping that goods will become cheaper the longer they wait. 

The credit crunch is a global problem, forcing banks to put the brakes on lending, hitting Britain's economy hard. House prices, an indicator of consumer wealth, have fallen 18% from last year's peak, unemployment is soaring and consumer confidence is plummeting.