Bank committee once again split over policy

The minutes released yesterday showed seven members of the MPC voted for no change, with interest rates held at 0.5 per cent for the 20th consecutive month. Quantitative easing (QE) - asset purchases from the banks to provide stimulus to the economy - was pegged at 200 billion.

But the minutes of the meeting on 8 and 9 December suggested increasing concerns over inflation after it rose again in November to 3.3 per cent. Members were also concerned about future potential financial shocks from the euro zone.

Upside risks to inflation had increased, the minutes said, but added that most MPC members continued to believe economic conditions would bring inflation back to target in the medium term.

Andrew Sentance remained the lone hawk, calling again for a quarter-point rise in rates to address rising inflation, while Adam Posen again called for another 50bn in QE to support the recovery. "The MPC minutes are more hawkish this month despite the fact that the vote stayed the same," Philip Shaw, Investec's UK economist, said.