UK rate hike could come sooner according to Kristin Forbes
Members of the Bank's nine-strong Monetary Policy Committee (MPC) voted eight to one to leave rates on holdReuters

The Bank of England has held interest rates for the 81st month in a row, leaving them unchanged at 0.5% on 10 December. Members of the nine-strong Monetary Policy Committee (MPC) voted eight to one to leave rates on hold, where they have remained for more than six years.

Ian McCafferty
Ian McCafferty was the only member of the Bank of England's MPC to vote for a raise in interest ratesReuters

The minutes revealed Ian McCafferty was the only member of the MPC to go against the grain, "given his view that the path of domestic costs was more likely to lead to inflation exceeding the target in the medium term than was embodied in the Committee's collective November projections".

They added that inflation is expected to have been slightly positive in November and is predicted to rise further because some of the large falls in energy and food prices seen at the turn of last year will drop out of the annual comparison.

The minutes also reported "there would need to be a sustained firming in domestic cost pressures, compared with their current rates, in order to return inflation to the 2% target in around two years' time".

The decision comes as the US Federal Reserve looks poised to raise interest rates for the first time in nine years. Earlier in 2015, its chairman Janet Yellen said if the economy progressed as expected, "economic conditions would make it appropriate at some point this year to raise" the Fed's key interest rate.

On 16 December, America's policymakers will decide whether to raise US rates for the first time since 2006. This has already triggered fears that it will disrupt the markets at a time when the global economy and China's growth have been slowing down.

Meanwhile, at the start of December, the European Central Bank announced a cut to overnight deposit rates from -0.2% to -0.3%. It also extended a €60bn (£43bn) stimulus programme by six months.

"The MPC's decision to leave interest rates on hold again today highlights how the UK is set to tread the middle path between a loosening ECB and tightening US Fed," said Scott Bowman, a UK economist at research company Capital Economics. "Accordingly, we think the market has gone too far in pushing back the first rate hike to early 2017 and believe it will occur in mid-2016."