Expectations of another rate cut have risen after the release of minutes from the Bank of England meeting at which rates were lowered from 4.5% to 3%.
The Bank’s nine-member committee voted unanimously for the cut on 6 November, but considered a bigger one.
The Bank’s own calculations showed that a cut to 2.5%, or even lower, would be needed to stop inflation falling too far below its target next year.
But the rate-setters decided such a big cut would come as too much of a shock.
The one-and-a-half percentage point cut they agreed on was the biggest reduction since 1981, and took rates to the lowest level since 1955.
“It’s confirming that we’re going to see more rate cuts from the Bank of England, and more aggressive rate cuts,” said Audrey Childe-Freeman from Brown Brothers Harriman.
The minutes said that: “Some members thought there was an argument for leaving some of the required policy loosening to the months ahead to support confidence as the economy weakened.”