Two members of the Bank of England's Monetary Policy Committee voted against the decision to keep interest rates steady this month, despite signs the risk of a slowdown in consumer spending was growing.
Minutes of the April 6th and 7th MPC meeting published today showed Deputy Governor Andrew Large and executive director Paul Tucker believed that a rate rise of 25 basis points would help contain medium-term inflationary pressures and viewed concerns over the key area of household spending as overblown.
This was the second month in a row that both had voted for a rate rise while the rest of the committee voted to maintain rates at 4.75 per cent.
The verdict of the majority of the nine member committee was that the overall risk to the inflation forecast was still to the downside and there was no reason for them to change their vote.
"An increase in the repo rate was not necessary this month to keep CPI inflation on track to meet its target in the medium-term," the minutes said.
The report dropped recent references to a belief among some members that a rate rise would be warranted in due course.
There was little response from financial markets to the minutes which were in line with expectations although gilts enjoyed a brief rally. "We still think that rates have peaked at 4.75 per cent but yesterday's inflation data suggests that debate is still wide open," said Philip Shaw, Chief economist at Investec.
Data yesterday showed CPI inflation hit 1.9 per cent in March, its highest level in nearly 7 years but still below the official 2 per cent target.