By Christina Fincher

LONDON (Reuters) - Interest rates are likely to come down next month to safeguard the economy but aggressive cuts of the kind announced by the U.S. Federal Reserve are not on the cards, the Bank of England signalled on Wednesday.

Minutes of the Bank's Jan 9-10 rate-setting meeting showed policymakers were having to balance risks to growth against rising price pressures, a dilemma also highlighted by Governor Mervyn King on Tuesday.

Speaking to a business audience in Bristol, King said Britain's economy faced its most challenging year in a decade but suggested rapid-fire interest rate cuts were not the answer to financial market woes.

"The deep cuts in rates that the Federal Reserve seems to favour are not for the Bank of England," said Stephen Lewis at Monument Securities.

The minutes showed only arch-dove David Blanchflower opposed this month's decision to keep rates at 5.5 percent. Many in the market had expected the decision to be a closer call.

Sterling strengthened and stocks fell after their release at the same time as figures showing the economy grew slightly faster than expected in the final quarter of last year.

Preliminary data showed Britain's economy grew 0.6 percent in the three-month period, easing from 0.7 percent in the third quarter but still recording the strongest full-year performance since 2004 -- growth of 3.1 percent.

MILD DECELERATION