Three-way split persists among MPC members

Sterling rose after minutes from the November 3-4 Monetary Policy Committee meeting showed the same vote as in October when one wanted more stimulus, another wanted a rate hike and the rest opting for unchanged policy.

There had been some speculation one or more members of the MPC would join the call for a resumption of quantitative easing.

Inflation, which the Bank predicts will fall below its two per cent target in two years, has held above the target this year and is expected to remain strong in 2011, making it harder for the central bank to sanction any further loosening of policy.

But fears over the growth outlook, especially ahead of big public sector spending cuts next year and given concerns about Europe's economic stability, mean the Bank must be careful not to choke off Britain's recovery by raising rates too early.

"The committee continues to believe that taking any decisive action at the moment would be premature and is content to 'wait and see'," said Nida Ali, economic advisor to the Ernst & Young ITEM Club.

Seven members of the nine-strong MPC voted to keep interest rates at a record low of 0.5 per cent and maintain the central bank's 200bn quantitative easing programme.

Andrew Sentance repeated his call for a quarter-point rate hike and Adam Posen argued that the economy needed 50bn more QE to alleviate the downside risks from the government's austerity drive.

But the majority felt not enough had changed since their October meeting and the right action was "to maintain the current highly expansionary stance of monetary policy".

The central bank's latest forecasts showed an unusually wide range of risks in both directions for the economy and inflation,