Steeper reductions in Britain interest rates, possibly as much as 0.5 of a percentage point to 6.75 per cent, to fend off a potential British recession are to be considered by the Bank of England at next month's meeting of its monetary policy committee (MPC). The committee lowered British interest rates by 0.25 of a point to 7.25 per cent earlier this month. MPC minutes published yesterday show that the nine-strong committee was unanimous in backing a rate reduction for the first time since the bank took control of interest rates in May 1997. But two members of the committee - economists Mr De Anne Julius and Mr Willem Buiter - argued that a 0.25 point cut was not enough and urged a reduction of 0.50 of a point.

External conditions had deteriorated significantly during the global financial crisis and that "the chances of a UK recession next year had increased", they argued.

Although the 0.25 point reduction got the backing of a majority of the committee, the decision not to sanction a larger cut was only prompted by the desire to consider updated economic forecasts assessing the likely impact of the global financial crisis. On this score, a further reduction in British rates of at least 0.25 of a point looks certain next month with a larger 0.50 per cent cut a distinct possibility.