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The data dampened market hopes for another interest rate cut at the central bank's policy review June 17.
The international economic outlook will remain the main concern for the bank and would be the motive for another interest rate cut, he said.
In addition, investors are now likely to have to wait until March 20, the next scheduled meeting of Federal Reserve policy makers, for another interest rate cut.
"Overall, the services survey clearly adds weight to the case for another interest rate hike, possibly as early as February," said Howard Archer at Global Insight.
The inflation rate in Britain unexpectedly fell last month below the Bank of England's 2 percent target for the first time since March 2006, weakening the case for another interest rate increase.
Given the prospects for another interest rate cut and the amount of cash on the sidelines, Charles Pradilla, chief investment strategist at SG Cowen, said he was somewhat surprised that stocks had not rebounded more strongly.
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Continued growth in the housing market may persuade the Bank of England's Monetary Policy Committee to vote for another interest-rate rise as early as next month, economists said today.
This resulted in an annual core-inflation rate of 2.4% too high for the Federal Reserve's comfort and a cue for another interest-rate hike when the central bankers next meet, on June 29th, and perhaps after that, too.The American economy also appears to be slowing, however.
Treasury Prices Rise (Reuters) -- Treasuries rose yesterday after a report showed that the struggling manufacturing sector was stabilizing but still mired in a nine-month recession, supporting expectations for another deep interest rate cut by the Federal Reserve this month.
IHS Global Insight economist Howard Archer said that the minutes "open the door very wide for another sharp interest rate cut in December".
After today's doom and gloom, the street is calling on the Fed for another emergency interest rate cut.
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