Minutes of the MPC’s meeting held on the 8th and 9th February also revealed that market participants expected the committee to vote to increase the amount of Quantitative Easing at the meeting.
The MPC said that strains in bank funding markets during the second half of 2011 had begun to feed through into further increases in the cost of credit for some borrowers.
However the committee also said that this had improved since the turn of the year and in time it would allow spreads on interest rates paid by UK households and businesses over risk-free rates to decline somewhat.
Members of the MPC were split on its decision to increase the size of the asset purchase programme, the Bank’s Quantitative Easing programme.
David Miles and Adam Posen voted to increase the amount of QE by £75bn to £350bn.
The remaining seven members however all opted to increase the amount by £50bn to £325bn.
The committee was unanimous on its decision to maintain the base rate at 0.5%.
The MPC said the introduction of an additional round of QE was driven by the most recent projections in the February inflation report that, without further monetary stimulus, inflation would undershoot the 2% target in the medium term.
Minutes of the MPC meeting said: “An increase of £50bn in the stock of asset purchases would represent a material monetary stimulus and it was not clear that a stimulus larger than that was warranted at the current juncture.
“In addition, given market expectations, a larger increase risked sending a signal that the committee thought the economic situation was weaker than it was.”
