All nine members of the Bank of England's Monetary Policy Committee voted to keep interest rates at 5.75% earlier this month, judging it was too soon to tell how financial market troubles would play out.
But minutes of the Sept. 5-6 meeting published on Wednesday also showed that MPC members agreed that the upside risks to inflation had receded somewhat as a result of turmoil on financial markets and developments in the real economy.
There was no discussion of a move in rates in either direction and the minutes reinforced expectations that borrowing costs, after five increases in the past year, have now peaked and could even fall quite soon.
"We would certainly expect rates to come down by early next year and quite possibly by the end of this year," said Philip Shaw, chief economist at Investec.
The BoE minutes said the impact of financial market disruption would depend on how long it lasted and how widespread it turned out to be. "This was still very unclear," the minutes said.
The BoE's prognosis back then was that the market turmoil was likely to be temporary and that a sustained re-pricing of credit risk was not unwelcome.
Since then, Northern Rock, Britain's fifth biggest mortgage lender, has had to seek an emergency funding line from the BoE.
This prompted a run on deposits at the bank, which threatened to escalate into a full-blown banking crisis.
A government guarantee of deposits appears to have calmed the situation for now but the BoE has come under fire for not acting to ease money market pressures sooner.
BoE Governor Mervyn King will get to have his say at a parliamentary committee hearing on Thursday.
The U.S. Federal Reserve cut interest rates on Tuesday by 50 basis points and many analysts argue that the BoE will soon have to follow suit if the crisis in markets deepens.
In the minutes, the MPC said it expected that once banks' balance sheets had adjusted, the demand for extra liquidity would ease and short-term money market rates would come down.
It would monitor conditions closely to see how they affected the real economy, on which there had not been much news. Spare capacity was still limited and signs of price pressures elevated.
The MPC thought consumption had been a little weaker than expected in the second quarter and the housing market was slowing gently.
Inflation was expected to remain around the 2% target and the recent decline should help to contain price expectations.