Chief executive Alan Mitchell said, “We are absolutely delighted with the scale of the cut.

“What it indicates is the Bank of England realises the potential seriousness of the situation and the need to move quickly.

“I don’t think many were predicting 1.5%. The Bank of England tends to be cautious but on this occasion it has been courageous and decisive, which is what it needed to be.”

Mr Mitchell said he was hopeful the cut would be passed on to customers in the short term, and cautioned banks which don’t could be making a mistake.

“They need to take a long term look at this, because, if banks don’t pass on rates, then customers will remember that when they are looking for new products and may go elsewhere,” he said.

The chamber said local members had been calling for a rate cut, which would give some access to capital which would enable them to invest “or in some cases keep the business going”.

Mr Mitchell continued, “There is clear evidence the UK economy is shrinking, and businesses in Dundee and Angus are not immune from the effects of the economic downturn and the credit crunch.

“The Government has taken action to boost the liquidity of the banking sector and it is excellent news the Bank of England has backed this up.

“This announcement sets the scene nicely for our meeting later this month with Sir John Gieve, the Deputy Governor of the Bank of England. He will be meeting Chamber members in Dundee and Arbroath and we expect a very lively discussion with him.”

Chief Executive of Scottish Chambers of Commerce, Liz Cameron, added, “With inflation worries set to ease over the next few months, it is essential for both business and consumer confidence that interest rates are low.

“This bold decision is the clearest possible indication that the Bank of England means business.”

Today’s decision to bring rates down to 3% was also welcomed by the CBI in Scotland.

Assistant director David Lonsdale said, “This is a bold move and achieves what the CBI has been calling for.

“This bumper rate cut should provide welcome relief to businesses, and allow banks to pass on the benefits to their customers.”

The Fife business community also welcomed the move. David Chalmers, Chairman of the Fife Federation of Small Businesses, was surprised by the size of the cut but believes it could bring great benefits to business in the area.

He added, “Any reduction in rates is welcome but it really depends on the banks. Providing they pass on the benefits of these cuts, it could provide an excellent boost.”