This is only the start. The Bank of England had to raise interest rates five times in eight months to tame the housing boom.
Even then the official rate had to stay at 4.75 per cent for a year to do the trick, amid constant talk about the next move being higher. In the process, manufacturing was driven into, at least, a technical recession. Retailers are reeling from the sudden loss of the "feel-rich factor" generated by rapidly rising house prices.
All in all, the British economy looks like growing by, say, two per cent this year rather than the three per cent-plus on which Gordon Brown based his Budget sums. So taxpayers are bracing themselves for the consequences. Already, council tax and utility bills are mopping up more of most household budgets than most householders bargained for.
The Royal Bank of Scotland's Sir Fred Goodwin expects it to take longer to rebuild confidence than it took the bank to dispel the over-confidence that prevailed until this time last year. He is surely right.
Bankers are good judges of these things. The money market is probably right to be looking for another cut this autumn. After that who knows? Several West Midlanders yesterday accused the Bank of England of waiting too long and then not acting decisively enough. Certainly, industry could have done with a helping hand some months ago and shopkeepers are feeling understandably sore --though the Bank could never have brought the housing market to heel without checking the shopping habits of newly enriched homeowners. That said, the Bank's interest-setting committee has established an impressive record of avoiding "Grand Old Duke of York" behaviour. Unlike several Chancellors of the Exchequer in the days when Chancellors set the rate, it does not march it up to the top of the hill so that it can march down again ahead of an election. That this was the first change for a year - and the first cut for two - tells a story of its own.
It is good for the the Bank's credibility. We know it did not make yesterday's cut half-expecting to unwind it by Christmas.
That itself is a comfort for anybody who was hesitating to buy a house for fear that interest rates might be heading higher, as many of us supposed last winter.
Just the same, the Bank's job is to keep inflation close to two per cent, precisely where it was in June, not to micromanage the economy. If ruinous oil prices, or utility bills, start feeding through into pay claims, don't expect much mercy.