The Bank of England Monetary Policy Committee delivered the widely expected 25 basis point hike at its June meeting on another split vote, with three members backing a 50 bps hike.
The MPC ditched its previous forward guidance that further rate hikes might be needed in coming months and instead stated that it would do what is needed to get inflation back to target and if inflation pressures appeared more persistent it would "act forcefully in response."
The vote was in line with many analysts expectations, with the three members who backed a 50 bps hike, Jonathan Haskel, Catherine Mann and Michael Saunders, all having voted for 50bps in May.
As MNI has reported, the former guidance over the possibility of hikes in coming months was an attempted compromise position that lacked support on the MPC, with no consensus on the likelihood of further hikes in the near future.
The new position contains a hawkish twist, with the monetary policy summary stating that "The Committee will be particularly alert to indications of more persistent inflationary pressures, and will if necessary act forcefully in response."
The dilemma facing the MPC near-term, of declining economic activity and rising inflation, was highlighted by updated staff assessments revealing that they now expected growth to fall 0.3% on the quarter in Q2 and inflation to peak around 11% in October.
The minutes noted signs of domestically generated inflation, with a tight UK labour market and signs of "robust costs and price pressures."
The thin minutes reflected the fact the June meeting was not accompanied by a quarterly forecast round, with no detailed analysis of new labour market developments. The vote also took place before the US Federal Reserve 75 basis point hike was announced.