BOE Minutes Show Larger Rate Cut Was Considered

The Bank of England's rate-setting body voted 9-0 to cut rates to 2% this month and considered a bigger move, minutes from its meeting released today have shown.

The monetary policy committee (MPC) agreed that a cut in the Bank rate from 3% to 2% was the minimum needed.

However, it avoided a deeper cut on concerns it could hit the pound and undermine confidence in the economy.

The minutes are likely to reinforce expectations that UK rates will fall further in the months ahead.

The MPC appeared to welcome the sharp fall in sterling in recent weeks, saying it should support the economy by boosting export growth while the fall in the oil price would lift consumer spending power.

In today's minutes the MPC also noted the importance of getting banks lending again but added that interest rates alone would not be enough to tackle limited credit availability.

"Further measures to underpin lending growth would be needed, building on the government's package announced in October to recapitalise and guarantee funding to the banks," they said.