Most homeowners won't be happy with today's announcement by the Bank of England's Monetary Policy Committee to raise the repro rate by 0.25% to 4.75% but many will be very pleased the MPC didn't make a larger increase called for by some economists.

Last week the National Institute of Economic and Social Research (NIESR) 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.

But in the event, despite news that manufacturing powered ahead at its fastest pace in a decade and data from Nationwide Building Society last week, which said house prices soared ahead by 2.1% during July, the Committee decided to settle for just a quarter point rise today.

Although the MPC say they do not target house prices, they have been concerned that the longer the boom goes on, the bigger the chance of a crash that could take the whole economy down. Clearly pleased with recent housing market figures, the Bank said in today's announcement that although the housing market remains buoyant, there are now signs that it is starting to ease, and the growth of consumption may be moderating.

Earlier this week property website Rightmove reported "incontrovertible evidence" that the market had turned, saying the average asking price of a typical property dropped by 0.5% during the three weeks to the end of July to average £195,306.

The Bank said output growth has been robust and business surveys point to continued expansion. Investment and public sector consumption have both grown strongly and demand in UK export markets continues to pick up.

CPI inflation reached 1.6% in June. It is likely to fall back in the near term, but underlying cost pressures have risen. With demand already high relative to the supply capacity of the economy, continued strong growth is likely to lead to rising inflationary pressures.

Against that background, the Committee judged that an increase of 0.25 percentage points in the repo rate to 4.75% was necessary to keep CPI inflation on track to meet the 2% target in the medium term.