It was the Bank’s first “Super Thursday” when all three official updates are published simultaneously.
The minutes revealed that only Ian McCafferty voted for a rate rise - of 0.25% – a slightly more dovish split than economists were predicting and diverging from last month’s unanimous vote to hold rates.
McCafferty voted based on a more hawkish belief that demand growth and wage pressures were likely to be greater and the margin of spare capacity smaller than embodied in the committee’s collective August projections.
A statement from the Bank said: “All members agree that, given the likely persistence of the headwinds weighing on the economy, when bank rate does begin to rise, it is expected to do so more gradually and to a lower level than in recent cycles.
“This guidance is an expectation, not a promise. The actual path bank rate will follow over the next few years will depend on the economic circumstances. The committee will continue to monitor closely the incoming data.”
Despite dissention on whether to hold the base rate, all nine MPC members voted to maintain quantitative easing at £375bn.
In the near term inflation forecasts were described as “muted” following the fall in energy prices over the past few months.
In the more medium term however the Bank said inflation expectations remained “well-anchored”.
The quarterly inflation report said: “Robust private domestic demand is expected to produce sufficient momentum to eliminate the margin of spare capacity over the next year or so, despite the continuing fiscal consolidation and modest global growth.
“This is judged likely to generate the rise in domestic costs expected to be necessary to return inflation to the target in the medium term.
“There is little evidence in wage settlements or spending patterns of any deflationary mindset among businesses and households.”
The latest consumer price inflation figures showed 0% growth in prices in June – significantly under the Bank’s 2% inflation target.
The report said: “Were bank rate to follow the gently rising path implied by market yields, the committee judges that demand growth would be sufficient to return inflation to the target within two years.
“In its projections, inflation then moves slightly above the target in the third year of the forecast period as sustained growth leads to a degree of excess demand.”
