Hopes of further significant cuts in benchmark UK interest rates surged yesterday with publication of minutes of the October 8 special meeting of the Bank of England's Monetary Policy Committee, at which a half-point reduction to 4.5% was implemented.

These minutes showed all nine MPC members backed the cut, part of co-ordinated global action involving other central banks including those in the US and eurozone.

They also highlighted MPC members' growing fears about the rapid deterioration of the UK economy and also the speed with which their worries about inflation have evaporated.

Signalling that this month's half-point cut in rates was likely to be followed up with further reductions soon, the minutes noted MPC members' recognition of the "need for a relaxation in monetary policy", and added: "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. But the evidence available now was clearly sufficient to justify a reduction in Bank Rate of 50 basis points this month."

The minutes fuelled expectations that the MPC is likely to implement a further cut in UK base rates when it concludes its next scheduled monthly meeting on November 6.

Vicky Redwood, UK economist at London-based consultancy Capital Economics, said: "A November interest rate cut is looking pretty certain, with a good chance that it is another 50 (basis points). After all the MPC changed interest rates quickly, and a number of times, after the Asian crisis in 1998 and the 2001 terrorist attacks."

Looking beyond next month, Redwood added: "And rates are likely to continue to drop sharply thereafter. We see rates getting to 2.5% or even lower next year."

James Knightley, economist at Dutch bank ING, predicted UK base rates would fall to 2.75% by the first half of next year and highlighted the chances of them going even lower, given his forecast that UK gross domestic product will contract for four consecutive quarters.

Accountancy firm Ernst & Young's influential ITEM Club economic think-tank yesterday predicted that base rates would fall to 3% by mid-2009.

The minutes, using the same phrase delivered by Bank of England Governor Mervyn King in a speech in Leeds on Tuesday night, noted MPC members' judgement that "during the past month, the balance of risks to inflation in the medium term shifted decisively to the downside".

They highlighted MPC members' acute awareness of the dramatic escalation of the global credit crisis following the September 15 collapse of Lehman Brothers, which led the UK government to kick off on October 8 what has since developed into an international programme of recapitalisation of banks.

The minutes noted that reports from the Bank of England's agents around the UK "suggested that consumption had weakened markedly in the third quarter".

And they dwelt on the slew of weak economic releases in the month since the MPC's September meeting.

The minutes stated: "Data released over the past month indicated that the outlook for economic activity in the United Kingdom had deteriorated substantially, reflecting a sharp monetary contraction. Output growth had slowed to a halt in the second quarter, business surveys pointed to further weakening during the second half of 2008, and the labour market had softened. Consumer spending growth had slowed, in part as a result of the squeeze on real incomes, while business and dwellings investment had declined.

"Equity prices had fallen, and the further tightening in credit conditions would also weigh down on domestic demand growth.

"The depreciation in sterling over the past year was likely to support net exports, but the prospects for demand growth in the United Kingdom's main export markets had worsened. The weakness in output growth at home was likely to open up a growing margin of spare capacity that would over time bear down on inflation."

The minutes added: "Over the month, the risk of a sharper monetary contraction had risen, and hence of a more pronounced slowing in activity and employment than was needed to keep inflation at target in the medium term. The impact of the government's programme to recapitalise the major UK banks on lending growth was likely to be positive. But the scale and timing of that were still highly uncertain.

"Although inflation was expected to remain well above the target for some time, the risk that inflation expectations for the medium term would be dislodged had diminished in the light of the weaker outlook for economic activity. Oil and many other commodity prices were lower The increase in slack in the labour market meant it was less likely that cost pressures would feed through into higher wage growth. All these developments pointed to the need for a relaxation in monetary policy."

The MPC had been due to announce its decision on UK rates at noon on October 9, but departed from its pattern of two-day meetings to participate in the co-ordinated action on October 8.