The emergency half-point cut in interest rates by the Bank of England a fortnight ago was unanimously backed by all nine members of its rate-setting Monetary Policy Committee (MPC), it emerged today.

Hopes of more, imminent cuts in the cost of borrowing leapt as Bank minutes revealed that the MPC had united to throw their weight behind a co-ordinated move to cut rates with other leading central banks, including the US Federal Reserve and the European Central Bank (ECB).

Today’s minutes showed that the MPC had lined up to join Mervyn King, the Bank's Governor, in backing the concerted emergency action across the world on October 8 after he briefed the committee about his discussions on the plan with the Fed and the ECB.

“Given the global nature of the financial market turbulence, there was a strong argument for participating in the proposed co-ordinated international action,” the MPC's minutes showed it had agreed.

Last night, Mr King admitted for the first time last night that “it now seems likely that the UK economy is entering a recession”, sending the pound plummeting this morning as markets reacted to mounting gloom over Britain’s prospects and bet on steep cuts in rates.

Sterling plunged by almost 5 cents against a sharply rising dollar, hitting its lowest levels against the greenback in five years, at $1.6264 in early London trading - down by nearly three per cent from levels of $1.6750 ahead of the Governor’s speech.

Today's minutes from the MPC meeting revealed that the rate-setting panel judged that the severe convulsions sweeping world markets, and a raft of grim economic news over the previous month, had all signalled a sharp worsening in the outlook for Britain’s economy.

“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.

The dangers from inflation were also judged by the MPC to have gone into sharp retreat, with a worry now emerging that a slump in the economy could eventually push inflation under its 2 per cent target, from present record levels above 5 per cent.

The risks on inflation had “shifted decisively to the downside”, MPC members felt, according to today’s record of their discussion.

After Mr King echoed that message in his hard-hitting speech in Leeds last night, the minutes fuelled City expectations that the Bank will soon order further rate cuts.

Economists’ expectations that another half-point cut could be made next month were also reinforced as the minutes showed that the MPC had not even discussed any case for leaving interest rates on hold two weeks ago

The MPC debated how other factors that reduced the inflation threat including sharp falls in oil and other commodity prices, and rising unemployment, which meant that past, steep increases in living costs were now less likely to ignite inflationary wage deals.

Mr King boosted hopes of further rate cuts this year, and a steep fall in rates into next year, when he sounded a warning last night that Britain faces a “long, slow haul” to restore the economy to growth.

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