The Bank of England today refused to be drawn down the U.S. route of swingeing rate cuts as it held them steady at 5pc.

New Irish Premier Brian Cowen with President Mary McAleese

The hiatus was fuelled by the inflation clause in the Bank’s remit from the Treasury in the face of unremitting pressures on world and national prices.

Other voices were insisting that the credit crunch will be with us for two more years leading to widespread mortgage “rationing” by banks and lenders.

However, a consensus is building that a “Great Depression” is not in the offing as the resilience of the banking sector — with plentiful central bank support in america, Britain and Europe — is proving greater than many expected. Some commentators are even forecasting a “soft landing” for Western economies.

However, a two-year credit crunch will decimate the housing sector on both sides of the Atlantic. Particularly hard hit will be be the Club Med countries and Ireland, which is undergoing a particularly harsh decline in its house markets.

New Premier, Brian Cowen, has a hard road to travel, as the principal driving force of the Celtic Tiger economy comes to a standstill.