A split emerged at the top of the Bank of England today after it emerged that two members of the monetary policy committee - one of them Deputy Governor Sir John Gieve - voted for a March rate cut.

Gieve sided with arch-dove David Blanchflower in pushing for a cut to 5% earlier this month, pitting him against Governor Mervyn King who voted for rates to stay at 5.25%. King won the battle as the MPC voted seven-two for rates to remain unchanged.

The split emerged just hours after the US Federal Reserve slashed rates from 3% to 2.25% as it stepped up its fight against recession. It has reduced rates by three percentage points, from 5.25%, in the last six months.

Minutes from the Bank of England's latest meeting today revealed the MPC found the economy had slowed "less than expected" since February despite "mounting evidence of a weakening economy in the United States".

The Bank cut rates from 5.75% to 5.5% in December and to 5.25% in February but resisted another cut this month amid fears it could spark panic in the markets about the state of the economy, given its focus on inflation.

Inflation is running at a nine-month high of 2.5% and rising, making aggressive rate cuts more difficult in Britain than in the US.

"Back-to-back reductions might lead observers to think that the committee was focusing on downside risks to demand at the expense of the medium-term outlook for inflation," the Bank said. "That in turn could lead to an exaggerated response of the market yield curve to a rate reduction."

The City was today split over whether the Bank will cut rates next month or in May. Hawks argued the collapse of Bear Stearns since the March meeting made an April cut more likely. Economists warned aggressive rate cuts in the US and the opening of emergency funding facilities to Wall Street banks may not be enough to solve the banking crisis.

Catherine Macleod of BDO Stoy Hayward Investment Management said: "The Fed is doing what it can to manage the concerns about growth in the market whilst still keeping its power dry. There will almost certainly be worse news on the horizon and the faster the Fed cuts rates now, the more limited the room for manoeuvre, as well as confidence building in the future."