LONDON, Dec 19: Bank of England policymakers were united in their decision to cut interest rates by a quarter-point to 5.50 per cent earlier this month, according to minutes of the BoE meeting published on Wednesday.

Meanwhile, the tone of the minutes led some economists to forecast that British borrowing costs would fall sharply throughout 2008 as the economy seeks help to recover from a global credit crunch.

All nine members of the central bank’s Monetary Policy Committee (MPC) voted in favour of the first rate cut since August 2005, the minutes revealed.

The MPC trimmed British borrowing costs on December 6 in a bid to combat slower economic growth hit by the ongoing credit squeeze.

“The worsening financial market turmoil, and the consequent tightening of credit conditions, had increased the downside risks to activity and inflation in the medium term,” the minutes said.

“The committee thought that the downside risks to the economy and inflation in the medium term from the deterioration in financial market conditions outweighed the potential upside risks to inflation from short-run cost pressures.”

They added that the MPC believed that “a substantial loosening in policy might be needed.”

Vicky Redwood, of Capital Economics, said this “suggests UK rates will be cut more sharply than markets expect.”

She added: “We think rates could fall as low as 4.0 per cent by early 2009.”—AFP