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Bank said wait and see what house prices do

Only one member of the Bank of England's MPC voted against holding the bank rate steady this month. Deputy governor Sir Andrew Large was concerned enough about increasing consumer debt to vote for raising the bank rate by 0.25%

Minutes from the Bank's rate-setting Monetary Policy Committee (MPC) show there was general concern about house price growth, but monthly rates of house price inflation from the two main lender's indices had lowered.

There was some surprise at the continuing increase of house prices. However the committee noted that RICS data said moderation was expected in the coming months and there had been fewer buyer enquiries.

Also, “there had been substantial downward revisions to mortgage data which now showed a much less marked increase over the past few months.”

The committee decided that it would be a “little while before the effects of last month's increase would become evident in the data” and along with other more steady factors, decided to wait before taking further action.

General inflation also came under scrutiny but the MPC were undecided about the reasons for consumption growth not slowing as much as predicted. Both the target and the method of calculation had changed and these factors may have blurred the predictions, said the committee.

Strong growth in the US economy and tentative signs of recovery in Europe matched the MPC's previous predictions.

However, the minutes suggest that interest rates could rise soon. "If the economy continues to evolve in line with the committee's central projections, a further increase in the repo rate would be warranted at some point," the minutes said.

The one dissenting MPC member, Mr Large, was concerned by the rise in consumer debt levels, and while accepting the thrust of the arguments put forward by the remaining members, Large put particular weight on the “vulnerabilities created by the continued build up of household debt” and felt an increase in the rate was justified.