Bank unanimous on freezing rates

Are interest rates set to go up again in August?

Members of the Bank of England's Monetary Policy Committee (MPC) voted unanimously against a third successive rate rise at July's meeting.

Rates were kept on hold at 4.5% after inflation in May proved below target, and there were tentative signals that the house market was slowing.

Minutes of the meeting showed the MPC was waiting for August's inflation report to review the rate situation.

In May and June, the MPC raised rates by a quarter point in each month.

Brief respite

The MPC has increased the cost of borrowing by 1.0% since last November in a bid to cool roaring house prices and temper consumer demand.

Though recent signs of a slow down in the housing market were encouraging, the Bank of England had hoped for more.

"There had been further tentative signs of a slowdown in the housing market, although house prices were above the level envisaged in the May Inflation Report projections," the minutes said.

Meanwhile, the labour market continued to tighten gradually, the MPC said, and there was some evidence of pressures building down the supply chain.

"The August Inflation Report would provide an opportunity to evaluate the news since May more fully," the minutes added.

However, economists reckon July's reprieve will be brief, with another quarter-point rate hike in August a virtual certainty.

"A 25 basis points hike in August is a done deal," said Lorenzo Codogno, economist at Bank of America.