THE Bank of England's dilemma between inflation fears and staving off a slowdown was highlighted today after rate-setters split three ways for the first time in nearly two years.

Minutes of the Bank's Monetary Policy Committee meeting two weeks ago revealed that six of its nine members voted for a quarter-point interest rate cut to 5 per cent.

But two members voted to keep rates unchanged due to inflation pressure from soaring oil costs, while another - David Blanchflower - called for a 0.5pc cut due to fears over a sharper than expected slowdown.

The three-way split is the MPC's first since May 2006.

The committee is walking a tightrope between balancing the risks to the economy with its mandate to keep inflation at two per cent. The official measure of inflation, the Consumer Prices Index, is currently above target at 2.5pc.

The majority of the committee, which included Bank Governor Mervyn King, argued that it was necessary to lower rates by 0.25pc to help offset the worsening conditions in credit markets feeding through to households and reduce the risk of an "unexpectedly sharp" slowdown later in the year.