The Bank of England's rate-setting Monetary Policy Committee voted 8 to 1 to cut rates by 0.25% to 5.25% earlier this month, the minutes of their meeting reveal this morning.

Only the arch-dove David Blanchflower voted for a more aggressive cut of 0.5%.

The minutes reveal the difficult balancing act the MPC is having to perform as it tries to cope with slowing demand and the threat of higher inflation on the back of rising energy and food prices.

"The Committee needed to balance the risk that a sharp slowing in activity would pull inflation below the target in the medium term against the risk that the elevated inflation expectations would keep inflation above target."

The majority of Monetary Policy Committee members felt that an immediate cut was needed, especially because of the fallout from the credit crunch.

"Interest rates were probably still bearing down on demand, partly because the higher market spreads meant that the level of Bank Rate consistent with any given monetary stance was lower than it had been before spreads had widened."

But David Blanchflower felt that "more weight should be placed on the risk of a very sharp slowdown in UK growth."

Vicky Redwood, of Capital Economics, said: "Blanchflower clearly puts more weight on the downside risks to growth than other members, with recent speeches showing that other members see the risks as more finely balanced. And in the past, he has failed to persuade other members of his views."

Economists predict that rates will not be cut again until April or May. Ms Redwood said: "We still see rates falling at a gradual pace – with the next cut perhaps coming in May."

Howard Archer, of Global Insight, said:" We expect the Bank of England to trim interest rates by a further 25 basis points to 5.00% in April or May, with the exact timing depending critically on just how weak the economic data is over the coming weeks and whether or not inflation expectations appear to be at least stabilising."

Last week, the Bank of England gave warning that economic growth will slow sharply this year in a hawkish quarterly inflation report. The Bank predicted that growth would slow to below 2 per cent by the end of the year, down from 3.1 per cent.

Mervyn King, Governor of the Bank of England, said that the possibility of a recession, which is defined as two quarters of negative growth, was “perfectly consistent with something not very far off our central projection”. However he was at pains to point out that the projections were “a world away” from a severe and prolonged downturn.

This month's rate cut was the second in three months, after five interest rate rises in the previous 18 months.

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