LONDON, May 9 Reuters The pound and gilt yields fell on Thursday, while Britain39;s bluechip stock index hit a record after the Bank of England took another step towards lowering interest rates, as a second official backed a rate cut.

Sterling fell as much as 0.4 against the dollar to 1.2446 , a twoweek low. It was last at 1.2471.

The pound was at 86.04 pence per euro , down 0.1.

The BoE said on Thursday its Monetary Policy Committee voted 72 to keep rates at a 16year high of 5.25 after Deputy Governor Dave Ramsden joined Swati Dhingra in voting for a cut to 5.

Economists polled by Reuters had mostly expected another 81 split to keep rates on hold.

We believe the BoE is setting the stage for a summer rate cut, said Hussain Mehdi, director, investment strategy at HSBC Asset Management.

Money market traders still see around a 45 chance of a rate cut from the Bank of England at next month39;s policy meeting, while around 55 basis points of easing is priced by year end, implying two quarterpoint cuts.

BoE Governor Andrew Bailey said future rate cuts may exceed those priced by the market.

It39;s likely that we will need to cut bank rates over the coming quarters and make monetary policy somewhat less restrictive over the forecast period possibly more so than currently priced into market rates, Bailey said in the postdecision press conference.

Markets fully price the first quarterpoint rate cut by the August meeting, earlier than the U.S. Federal Reserve, where a…