The Bank of England has delivered its clearest hint yet that interest rates will continue to fall over the coming months.

The minutes of the meeting of the recent Monetary Policy Committee revealed that the bank had considered an even bigger cut than the recent 1.5% drop, but opted against it for fear of sparking panic and a run on the pound.

"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," the minutes read.

The bank's own figures suggest a cut to at least 2.5% will be needed to counter the threat of deflation but many analysts have predicted rates could go as low as 1%.

The recent 1.5% cut was the biggest since 1981 and means the bank's interest rates are now at their lowest point since 1955.

But many high street banks have failed to pass on the full impact of the cuts to small businesses and homeowners.