Interest rates have been cut to 3.75%, the lowest level in almost three years, but further reductions are set to be a "closer call", the Bank of England has said.
In a knife-edge vote, policymakers voted 5-4 in favour to lower rates from 4% reflecting concerns over unemployment rising and weak economic growth.
The Bank said rates were likely to continue to fall in the future, but warned judgements on further cuts next year would more contested.
"We still think rates are on a gradual path downward but with every cut we make, how much further we go becomes a closer call," said the Bank's governor, Andrew Bailey.
The decision to lower borrowing costs from 4% was widely expected, after figures this week showed inflation, the rate prices rise at, slowed further to 3.2% in the year to November.
