All other things being equal, when a central bank cuts interest rates, it damages its home country's currency. With rates lower, there is less incentive to leave money in that currency. It should also be great for stocks, as companies can borrow more cheaply.

But all other things are far from equal. And so it was that a cut of 1.5 percentage points by the Bank of England, the biggest in its history as an independent institution, bringing British rates below those of the eurozone for the first time since the euro was created, helped to push sterling up.

Meanwhile the FTSE 100, which should have partied as though Christmas had come early, sold off severely.

As for the European Central Bank, it cut rates by "only" half a percentage point, and the euro badly underperformed sterling. Several other central banks in Europe also cut. This had little effect on stock markets across the continent, all of which fell about as much as the FTSE.

How to explain this? Take a look at what the banks said about inflation. The ECB sees a "further alleviation of upside risks to price stability at the policy-relevant medium-term horizon, even though they have not disappeared completely". It also cautions that discipline must be maintained.

This is a very different world from the BoE, where in a UK economy that has suffered stubbornly entrenched inflation expectations, "the risks to inflation have shifted decisively to the downside". That is the way the forex market sees the world - so it gave a vote of confidence in the UK economy, but not the eurozone.

What of stocks? After a 20 per cent rally, when many hoped the stars were aligned for a rally through to Christmas, such drastic actions came as a nasty reminder that the economic outlook remains very bleak, and prompted speculation that the BoE knows something the market does not. So people sold.