Bank voted 7-1 to hold interest rates

The Bank of England's monetary policy committee voted 7-1 to leave interest rates unchanged at 4.5% this month, Bank minutes showed today.

For the fifth month running, Stephen Nickell was the sole committee member to vote in favour of a quarter-point cut.

The majority of the MPC backed no change because inflation was likely to remain close to the Bank's 2% target, with some "upside" risks due to rising energy prices.

Oil prices have resumed their upward trend, surpassing the record levels reached during Hurricane Katrina last August. With prices reaching $72 (£40) a barrel, motorists now face the prospect of paying £1 a litre for petrol.

Although producer and consumer price inflation were little changed on the month, the minutes said inflation expectations "had picked up in recent surveys, and this would need to be monitored carefully".

The Bank's quarterly survey of attitudes to inflation, published yesterday, showed people think prices are rising much faster than they actually are. On average, people think prices are going up at an annual rate of 2.8%, but in reality they rose only 2% in February.

"The minutes point to a MPC steadfastly in wait and see mode, and suggest that any action on interest rates is unlikely for several more months to come," Howard Archer, of the consultancy Global Insight, said.

"The committee as a whole currently sees growth as being around trend and seems relatively comfortable about growth prospects."

Mr Archer said he believed interest rates would eventually come down because weak consumer spending would hold back economic growth over the coming months and that the Bank's growth forecast would prove too optimistic.

Bank minutes showed that, for the majority of MPC members, rising share and house prices would support consumer demand.

However, Mr Nickell, argued that the data continued to suggest slack in the economy and particularly in the labour market, with unemployment rising.

He also thought income would be hit by higher energy prices, increasing taxes so consumer spending would be unlikely to pick up. However, he saw no evidence of higher energy prices feeding through to higher pay settlements.

Only eight members attended April's meeting because Richard Lambert resigned from the MPC last month on conflict of interest grounds.

Mr Lambert is about to become director general of the CBI, and the Treasury is still to announce his successor.