Although all nine members of the Bank of England's Monetary Policy Committee voted for this month's quarter-point rate rise, it appears that a half-point rise was not even considered.

Before the meeting a half-point rise was expected by some analysts including the National Institute of Economic and Social Research (NIESR) who said there was a strong case for the MPC to influence expectations more forcibly by raising the repo rate by half a percentage point to 5% in August.

A 'sharp shock' type of interest rate rise had been previously discussed by the committee however, and was discounted by most members of the MPC then and it would appear it was not even considered this time.

The minutes out today show the MPC made its decision in the light of the projections published in the Inflation Report on Wednesday 11 August. The report predicted inflation would probably hit its 2.0 percent target in two years if interest rates rose as expected.

Neither the news on the month, nor since the May Inflation Report, had significantly changed the picture of a broadly based world recovery and UK GDP growth above trend, the report said.

House prices out of equilibrium

The committee said there were now more signs that the pace of house price increases was beginning to slacken. It said a deceleration in house prices would tend to slow the growth of consumption, but it was unclear how rapidly and by how much house price inflation would moderate.

The recent rapid growth of the buy-to-let market, raising the demand for housing as an investment asset was a complicating factor, the committee said, but it noted there was little evidence of selling in anticipation of lower future capital gains.

The report said that as costs were lower for the buy-to-let market - there were no moving costs for example - sales by buy-to-let owners could help to precipitate a more abrupt adjustment to house prices.