The NIESR (National Institute of Economic and Social Research) say that a rate rise over the new few months is possible because the MPC is beginning to change its views against a backdrop of rising inflation.

Some commentators had seen the possibility of a rise today but the Bank of England’s Monetary Policy Committee voted 5-3 to keep the Bank Rate unchanged at 0.25 per cent and maintained government bond purchases at £435bn and corporate bond purchases at £10bn. Consumer price inflation has risen to 2.9 per cent in the 12 months to May, above the bank’s 2 per cent target.

Rebecca Piggott, research fellow at NIESR, said: “The MPC voted narrowly to hold monetary policy unchanged, a closer vote than market expectations. This level of disagreement raises the probability of an interest rate rise in the near future and that would exert further pressure on household budgets, which are already under pressure from subdued real wage growth.

“It focusses the spotlight on the two forthcoming appointments to the MPC, which could tip the balance of future votes either way. One important reason for the close vote was the latest inflation figure which surprised the Bank on the upside. We forecast consumer price inflation of 3 per cent and 2.8 per cent on average in 2017 and 2018 respectively, before a return to target in 2019.”

NIESR’s latest quarterly forecast published in May projected GDP growth of 1.7 per cent per annum in 2017 and 1.9 per cent in 2018.

Matthew Russell, manager of the M&G Gilt & Fixed Interest Income Fund, broadly echoed the NIESR view on the bank rate but saw a rise later in the year. He said given that economic data has changed little since the last MPC meeting today’s votes in favour of a rise were “somewhat surprising.”

He said: “Presumably the two additional members (Michael Saunders and Ian McCafferty) joining Kristin Forbes for the first time in voting for a hike are increasingly concerned with inflation running above target, and have taken comfort in the strength of the labour market.

“Along with the vote the minutes state that they may need to withdraw "part of the stimulus that the Committee had injected in August last year - (that) would help to moderate the inflation overshoot".

“The minutes also point to stronger than expected investment and exports supporting demand, and offsetting weaker consumer spending. If we start to see some stronger economic data in the second half of the year I’d expect the market to start pricing in a much higher probability of a rate hike by year end.

“This was Kristin Forbes’ last meeting so there are two new appointments to be made to the MPC. The views’ of the new appointees will have added importance.”