All nine Bank of England Monetary Policy Committee members voted for this month's globally co-ordinated 50 basis point emergency cut in interest rates, minutes of their Oct. 8 meeting showed on Wednesday.
Governor Mervyn King briefed the other eight policymakers about the discussions of a coordinated move with other central banks including the U.S. Federal Reserve and European Central Bank and then invited them to decide on whether to join the action.
Most analysts expect a further cut in interest rates next month. But the minutes stressed it was unclear how far and fast borrowing costs would ultimately need to fall, and sterling recovered ground after the minutes were released.
"There are no clues either from the minutes or from Mervyn King's speech last night on the size of any subsequent easing," said Philip Shaw, chief economist at Investec.
After hitting a 5-year low of $1.6203 earlier in the global session, sterling cut losses to last stand at $1.6387, down 1.77 percent on the day.
The MPC judged that the financial market turmoil and economic data over the month pointed to a sharp deterioration in the prospects for the economy and had shifted the risks to the inflation outlook decisively to the downside.
"All these developments pointed to the need for a relaxation in monetary policy. In the current financial market turbulence, the reduction in Bank Rate that would ultimately be required to meet the inflation target was very difficult to gauge," the minutes said.
Most analysts expect the central bank to cut rates again in November due to the slowdown in the economy and the scale of the problems in the financial sector since the collapse of U.S. investment bank Lehman Brothers in September.
King admitted in a speech on Tuesday night that the economy was probably entering recession. But he also pointed to the need to balance the risk of inflation falling below the 2 percent target against that of the current high rate becoming embedded in people's expectations. (For details please double click on [nLM559092])
The minutes noted that while inflation, now running at 5.2 percent, could stay high for a while, the risk of it feeding into higher wages had diminished because of the weaker economic outlook.
"Oil and many other commodity prices were lower. The exchange rate had recovered some of its most recent falls but remained volatile. The increase in slack in the labour market meant that it was less likely that cost pressures would feed through into high wage growth," the minutes said.
