LONDON (AFX) - The Bank of England's Monetary Policy Committee voted by 7 to 2 to hold its repo rate at 5.75 pct on March 8, according to minutes of the meeting released today.
The MPC concluded however that "further cuts might be needed if the downside risks from the world economy materialised".
The minutes showed that MPC doves DeAnne Julius and Sushil Wadwhani voted against holding the repo rate steady, preferring a cut of 25 basis points.
Despite this the MPC concluded that "there was no great urgency for a such a cut but the risks to inflation lay on the downside and it was preferable to take steps to bring inflation back to the target level sooner rather than later".
The minutes revealed that the MPC's main concern was the U.S. slowdown.
"While the weakness evident in recent data was not perhaps as severe as had been feared, forward looking indicators were less reassuring," it said.
But the MPC considered the prospects for domestic UK demand a little stronger than expected at the time of the BoE's February inflation report. The minutes said the March 7 budget was in line with the November pre-budget report "so had little bearing on the Committee's decision this month". On the U.S., the minutes said that "while the downturn had not been as abrupt as some commentators had feared, the trough might be reached rather later and the recovery might now be rather less rapid". The U.S. slowdown could impact on UK business and consumer confidence but had not so far done so, the minutes said. "The most striking feature of the UK economy was the strength of demand and confidence despite the world outlook," it said. The MPC considered euro zone growth prospects "remained reasonably strong overall" in spite of the U.S. downturn.