Bank of England experts are sending mixed signals about interest rate cuts.

The Bank said the 'upside risk to inflation had probably eased a little' over the past month due to falling oil prices.

A more severe than expected economic slowdown in the second quarter would also begin to 'bear down' on price rises, said the Bank in the minutes to its latest rate-setting meeting.

This is strongest hint yet that the Monetary Policy Committee will start lowering borrowing costs, probably before the end of this year.

The minutes of the August MPC meeting revealed seven members of the nine-man committee voted to hold rates steady, including governor Mervyn King. Confusingly, one member voted for an immediate quarter-point cut and one voted to put rates up.

The bank rate remains 5.0%

The Bank of England governor Mervyn King hinted at more bad financial news at a press conference yesterday.

He said that because the Bank's central projection was for broadly flat economic growth over the next year, "it's bound to be the case that there is the possibility of a quarter or two of negative growth."

A technical recession occurs when there are two successive quarters of contraction.