BoE Governor Mark Carney on Rates
Bank of England governor Mark Carney has upped the rhetoric on interest rates risingReuters

The Monetary Policy Committee of the Bank of England is expected for the first time this year to be split over a decision on whether to raise interest rates, with policy hawks pushing for an increase.

Thursday (6 August) will see a first for BoE monetary policy as the decision on interest rates will be accompanied by the minutes of the meeting, rather than them following two weeks after. A triple whammy will be completed by the release of the bank's Quarterly Inflation Report for August.

Analysts expect BoE to keep interest rates at 0.50%, but the voting pattern, which will be known immediately, is expected to show at least two or three of the nine MPC members to vote for interest rates to be lifted by 25 basis points to 0.75%.

Chris Hare, analyst at Investec, said: "On the policy decision itself, we think there is a strong chance that one or two committee members will vote for a rate rise next week. Mood music for a rate rise has become louder in recent weeks."

The minutes of the July MPC meeting were more hawkish overall, indicating that the Bank of England is now getting closer to an interest rate hike. While all nine MPC members voted for unchanged interest rates in July, this was significantly influenced by the crisis in Greece which was peaking at the time of the meeting.

The July MPC minutes reported: "For a number of members, the balance of risks to medium-term inflation relative to the 2% target was becoming more skewed to the upside at the current level of Bank Rate.

"For these members, uncertainty caused by recent developments in Greece was a very material factor in their decisions: absent that uncertainty, the decision between holding Bank Rate at its current level versus a small increase was becoming more finely balanced."

Also of significance has been the noises being made by one of the more dovish MPC members David Miles, who stated in a mid-July speech: "I think the case for beginning a gradual normalisation in the stance of monetary policy is stronger than at any time since I joined the committee over six years ago."

He also indicated his belief that the Bank of England did not need to wait for the US Federal Reserve to act: "The time to start normalisation is soon; that is not something to shrink from."

Miles, who will be leaving MPC after the August meeting, reiterated his hawkish comments in a subsequent magazine interview, along with cryptic remarks as to how he will vote at his final MPC meeting in August.

Howard Archer, chief UK & European economist, IHS Global Insight, said: "We expect the growth and inflation forecasts in the Bank of England's Quarterly Inflation Report for August to reinforce the view that a gradual rise in interest rates is set to start around the turn of the year.

"Bank of England policymakers, led by Governor Mark Carney, have recently been stepping up the rhetoric to prepare consumers and businesses for a near-term small interest rate hike."

Archer added that the rebound in GDP to 0.7% in the second quarter supports the case foe a rate rise.