Two MPC members voted for interest rate cut

Two members of the Monetary Policy Committee voted for a cut in interest rates of 0.25%, the MPC minutes reveal.

John Gieve, deputy governor responsible for financial stability, and David Blanchflower preferred a reduction, compared to seven including governor Mervyn King, who voted for an interest rate freeze of 5.25%.

The minutes show members discussed deteriorating prospects for the US economy and that financial markets had taken a turn for the worse.

The minutes indicate that members believe stressed conditions in financial markets are expected to last for longer.

Members debated how these conditions could increase the downside risks to UK economy growth and to inflation

Although some members believed the evidence showed a need for an interest rate reduction in spring, others thought previous rate cuts had been offset by market rate increases, so therefore the interest rate policy should still be neutral.