Hopes of another interest rate cut next month have been dampened after Bank of England minutes showed inflation fears at the top of the agenda.

Policymakers on the Bank's Monetary Policy Committee (MPC) voted 7-2 in favour of keeping rates on hold at 5.25% in March, records of their meeting two weeks ago revealed.

Despite fears over the UK economy, activity indicators pointed to "less of a slowdown than expected", the minutes said.

The committee - which met before the latest bout of stock market turbulence - also expects inflation will rise strongly in coming months as higher household energy bills hit home.

The MPC cut rates in December and February but added that a move lower in March could send the signal that rate-setters were focused on risks to demand at the expense of their mandate to keep a lid on prices.

The two MPC members who voted for a 0.25% cut - David Blanchflower and Deputy Governor John Gieve - pressed for the move amid worsening prospects for the US economy and financial instability.

They also argued that the two previous rate cuts had not been passed on to borrowers in full by banks eager to bolster their balance sheets following the credit crunch.

But Capital Economics' Jonathan Loynes said the minutes put "a bit of a dampener" on a possible April easing.

He said: "Although two members voted for a cut, the majority sounded like they are in no hurry at all."

The Bank's official measure of inflation, the Consumer Prices Index, rose to 2.5% in February - its highest point in nine months and above the Bank's 2% target.

The MPC, however, said inflation and the economy were "roughly on track" with February's forecasts despite pressure from rising oil and food costs.

The minutes added: "For the majority of members, despite some differences in the assessment, the balance of risks had not changed sufficiently to merit a change in Bank rate."

But Mr Loynes added: "The growth outlook has surely deteriorated since the meeting and could continue to do so over the next few weeks.

"May still looks the most likely date for the next cut, with rates falling at a modest pace thereafter."

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