Interest rates are set to remain at 0.5 per cent despite one member of the Bank of England’s committee voting for a rise.

Rates were yet again set at 0.5 per cent for the 14th month running by the Monetary Policy Committee, the Bank of England’s members responsible for deciding the base rate.

But one member made a surprise vote by urging the committee to consider a rise to 0.75 per cent.

Committee member Andrew Sentance argued that the rise was needed to help reduce inflation, which hit a 17-month high of 3.7 per cent in April before dipping to 3.4 per cent last month.

Explaining his reasons for the vote the MPC minutes state: “For one member, developments over the past month were consistent with a pattern which had been developing over the past year. Inflation had proved resilient in the aftermath of the recession, casting doubt on the future dampening impact of spare capacity on inflation. Demand had recovered at home and abroad, and the average growth of the main measures of UK nominal demand in recent quarters had been above typical pre-recession rates.

“Despite current uncertainties, for this member, it was appropriate to begin to withdraw gradually some of the exceptional monetary stimulus provided by the easing in policy in late 2008 and 2009.”
But despite Sentence’s concerns the vote of 7-1 carried forward another month of record low interest rates.

The news that a member had voted for a rate rise boosted markets and brought about a moment of confidence among investors when the pound rose 1 per cent against the dollar to its strongest level for six weeks.

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