Bank voted 8-1 to freeze UK rates

The Bank of England's rate-setting committee lost one of its interest rate hawks this month as it voted 8-1 to keep the cost of borrowing on hold.

The minutes of May's Monetary Policy Committee (MPC) meeting revealed that Paul Tucker, who had previously voted to raise rates, backed down this time.

Only Sir Andrew Large, the Bank's deputy governor, was hawkish enough to vote for an immediate 0.25% rate rise.

Sir Andrew believed a rise was needed to meet the 2% inflation target.

Rates were kept on hold at 4.75% for the ninth month in a row.

Rising oil prices

The latest minutes come a week after the Bank released its quarterly inflation report, saying that inflation could temporarily creep above the 2% target in the near term due to the ongoing rally in oil prices.

The minutes seemed very balanced and were very much signalling unchanged rates for some time to come Ross Walker, RBS Financial Markets

But it said there was little sign that inflation was in danger of spiralling out of control as there was some scope to accommodate the rise in the oil price.

However, the MPC warned that it "could adjust the policy stance accordingly" if manufacturers responded to rising oil prices by increasing wages and prices of their products.

Overall, the MPC said the risks to consumer price inflation were broadly balanced, but warned that an upturn in demand could fuel inflation further.

"The minutes seemed very balanced and were very much signalling unchanged rates for some time to come," said Ross Walker, economist at RBS Financial Markets.