The Bank of England cut rates to 5.0% from 5.25% at the monetary policy committee meeting on 1 August, saying it was a "finely balanced" decision and that further cuts might not be on their way.
It was a close 5-4 vote by the members of the MPC, swinging from the 7-2 majority in favour of holding rates last time.
While UK inflation returned to the committee's 2% target in May and June, with wage growth also easing, inflation is expected to pick up again later in the year, which is likely to be a key reason why four committee members preferred to hold the base rate as it was.
The four who wanted to hold rates were Huw Pill, Jonathan Haskell, Catherine Mann and Megan Greene, while the other members, including Governor Andrew Bailey all voted to cut rates.
Bailey, who chairs the committee, said "The risks of higher inflation remain. We need to make sure inflation stays low.
"So we have to be careful not to cut interest rates too much or too quickly," he said.
He says the MPC expects inflation to rise to around 2.75% later this year, but expects this increase to be temporary, with inflation coming back down next year.
"Over the coming years we need to make sure that inflation will continue to stay low."
Relatively hawkish
The vote split and a "relatively hawkish" press conference, suggests that "several MPC members for whom the decision was a close call may prefer a relatively gradual pace of monetary policy easing", said economist Matthew Swannell at BNP Paribas.,
"We are a little more optimistic than the BoE on services inflation over the coming months, and so we continue to hold our view that it will cut again in September. However, we see risks skewed towards a delay until November."
Ruth Gregory at Capital Economics said the tone showed the BoE is "in no rush to cut again", with the accompanying guidance and forecasts suggesting "it will proceed cautiously".
She now thinks the next 25 basis point cut will come in November, with "the risks to our forecast are tilted towards cuts being a bit slower and smaller than we currently expect."
Bailey's comments lend support to the view that rates will fall further than investors anticipate, Gregory added.
"That could be an attempt to avoid giving the impression the MPC is going to cut rates rapidly. We suspect today’s cut is a case of the Bank moving a bit sooner, rather than further, than we had anticipated."
Pantheon Macroeconomics' Rob Allen said he also now expects the MPC to cut again in November, compared to his previous call of December, and then expects a third in February.
He felt the MPC sounded "very dovish", but he sees a pause in cuts between February and August next year "after inflation rises this winter and wage and services price rises prove more stubborn than the MPC expects".
"All told we expect Bank Rate at 4.75% at the end of 2024 and 4.0% at the end of 2025."
*** Update: Adds economist reactions ***