Bank voted 6-1 for rate increase

The minutes of the monetary policy committee's (MPC) meeting showed the body agreed rates would have to rise to keep inflation in check.

However, new member David Blanchflower voted against an immediate rise because of worries over the labour market.

The increase was the first time UK rates had been raised for two years.

Last week, the Bank's latest quarterly inflation report hinted that rates may have to rise further to keep inflation on track to hit the government's 2% target.

On Tuesday, official figures showed that inflation fell marginally to 2.4% in July from 2.5% the month before.

Jobless worries

"The minutes did not convey the impression that the committee is looking towards an aggressive series of interest rate increases"
Philip Shaw, Investec

Jobless total rises again

The MPC cited firm economic growth, limited spare capacity in the economy and "rapid" growth in measures of broad money and credit as threats to inflation.

The committee judged that a rate rise was needed to bring inflation "back to the target in the medium term".

However, Mr Blanchflower voted against an immediate rise, arguing an increase in the number of unemployed suggested there may be more slack in the economy than previously thought, and that this could offset inflationary pressures elsewhere in the economy.

The latest unemployment figures, also released on Wednesday, showed that the number of people out of work rose by 92,000 to 1.68 million between April and June.

"The minutes did not convey the impression that the committee is looking towards an aggressive series of interest rate increases," said Philip Shaw, economist at Investec.

"Our best guess is that we'll see another tightening in November, based on the concerns raised in the inflation report, but it will depend on the data in the coming months.

"The key driver here is going to be the pace of growth and consumer demand."

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