Bank unanimous on cutting rates

Analysts said the 9-0 vote could make another cut more likely

All nine policymakers at the Bank of England voted to cut UK interest rates to 5.5% from 5.75% earlier this month, minutes show.

Policymakers also discussed whether the prospect of slower growth meant a bigger rate cut might be needed.

Analysts said the unanimous vote could boost expectations of another interest rate cut early next year.

It was the first time since November 2001 that the bank's policymakers were united in their decision to cut rates.

Economists had thought that two or three members of the Bank's Monetary Policy Committee (MPC) would have opposed the cut.

Credit crunch

On 6 December, the Bank cut the cost of borrowing for the first time since August 2005 in a bid to combat slower economic growth and the impact of an ongoing global credit squeeze.

Signs of slowing growth in the industrial world were already apparent Bank of England

"With the MPC voting unanimously in favour of easing, a back-to-back cut should be on the cards at the January MPC meeting," said David Brown, an economist at Bear Stearns.

"It looks like deepening concerns about the contagion risks from the credit crunch have superseded their fears about inflation."

The Bank said that the risk to the economy from a deterioration in financial market conditions outweighed the threat of rising prices and quicker inflation.

Slower growth

In a statement the Bank said that it cut rates because "signs of slowing growth in the industrial world were already apparent".

"That suggested a substantial loosening in policy might be needed," it added.

However, the Bank said that it did not cut interest rates by more than a quarter of a percentage point because a large reduction in the main Bank rate now "would increase the upside risk to inflation".

Rising food and petrol prices have buoyed inflation in recent months.

Official figures on Tuesday showed that the annual rate of consumer price inflation was unchanged at 2.1% last month, just above the government's target of 2%.

"The MPC was still worried about high inflation expectations, and lingering inflation concerns might still prompt it to hold off from cutting again until February," said Vicky Redwood, economist at Capital Economics.

The UK economy is expected to grow by 3.1% in 2007, but growth is expected to slow sharply to 1.9% in 2008.