Bank unanimous on rates rise

The Bank of England's monetary policy committee voted unanimously to raise interest rates this month, minutes of their August meeting showed today.

The news that all nine MPC members voted for the quarter-point rise was widely expected. It was the fifth upward move from the Bank since November last year as it seeks to curb consumer demand and cool the booming property market.

The MPC considered arguments for keeping rates steady at 4.5% but was swayed by reasons for raising borrowing costs by a quarter-point - most notably that a hike was needed if inflation was to hit its 2% target.

One member, probably the Bank's deputy governor, Andrew Large, was particularly worried by the rapid rise in consumer debt. Outstanding borrowing passed the ?1 trillion mark in June.

"A rise in the repo rate now would help to reduce the difficulties that could pose for monetary policy in the future," that member argued, according to the minutes.

In its quarterly inflation report last week, the Bank indicated that interest rates were near their peak and it predicted that it would hit its 2% inflation target in two years.

Analysts said today's minutes pointed to no more rises until November.

"It is interesting that the policy decision involved less talk about housing and is trying to focus the debate back to inflation expectations. Overall it seems clear that rates will remain unchanged at the September meeting and probably October too," said HSBC economist John Butler.

"We still expect the next move to come at November's meeting, which seems broadly consistent with the Bank's inflation report assumptions but also reflects our belief that short-term we are less convinced consumer spending is genuinely slowing," he added.

Bank minutes said that MPC forecasts suggested an increase in rates would be consistent with bringing inflation back to its 2% target over the next couple of years.

They also said there were now more signs that the pace of house price increases was beginning to slacken, citing a fall in the three-month-on-three-month rate of increase of the average of the Halifax and Nationwide indices in July.

"A deceleration in house prices would tend to slow the growth of consumption, but it was unclear how rapidly and by how much house price inflation would moderate," the minutes said.