"The unanimous vote clearly shows that despite the lingering threat from inflation, far and away the biggest concern for the Monetary Policy Committee is the prospect of an undesirably sharp slowdown in the economy," said Alan Clarke, economist at BNP Paribas.
"It's quite clearly more dovish than expected ... and it does suggest that more cuts are likely," said James Knightley senior economist at ING.
Money markets show investors are betting the Bank will cut rates at least three more times over the coming year. Analysts said the dovish tone of the minutes meant the next cut come as early as January.
"The worsening financial market turmoil, and the consequent tightening of credit conditions, had increased the downside risks to activity and inflation in the medium-term," the minutes said.
"Signs of slowing growth were already apparent. That suggested a substantial loosening in policy might be needed.
However, a large reduction in Bank Rate now would increase the upside risk to inflation."
This was the first time the MPC had voted unanimously to lower rates since Nov. 2001 when central banks all over the world were easing policy in the aftermath of the Sept. 11 attacks on the United States.
The MPC said evidence of tightening credit on the rest of the economy was so far patchy but the housing market slowdown had become more pronounced than expected.
"On balance, the Committee thought that the downside risks to the economy and inflation in the medium-term from the deterioration in financial market conditions outweighed the potential upside risks to inflation from short-run cost pressures," the minutes said.
Policymakers judged that at 5.75 percent, policy had already been restrictive and the expected slowdown would dampen inflationary pressures, putting them in a good position to act "pre-emptively" without losing inflation-fighting credibility.
Data earlier this week showed inflation remained above the Bank's two percent target in November. However, petrol prices were the chief culprit and core inflation fell to its lowest in a year.