The Bank of England's Monetary Policy Committee was split 8-1 for the third month running in February as Stephen Nickell again stood alone in opposing a decision to keep interest rates at 4.5 per cent.
Short sterling interest rate futures fell sharply while the pound gained a third of a cent on the dollar as minutes of the MPC's February 8th-9th meeting published today dented expectations of further rate cuts because many traders had bet on a closer vote.
Most MPC members thought the near-term outlook for consumer spending was stronger than envisaged in November and there was concern that a repeat of August's quarter-point cut would further stoke a recovering housing market.
"The minutes pour more cold water over the prospects for a near-term interest rate cut," said Howard Archer, economist at Global Insight.
Analysts in a poll last week had expected a 7-2 vote, with Kate Barker joining Nickell in wanting an immediate quarter-point cut.
But many economists revised that view to 8-1 this week after Barker made upbeat comments about growth prospects to a regional newspaper.
The central bank's Inflation Report published last week also showed it was in no hurry to move rates in either direction as it expected growth to recover to its historical average and consumer spending to pick up after a lacklustre 2005.
But Nickell predicted spare capacity in the economy would not fade as quickly as forecast in the BoE's central projection as the outlook for consumer spending and investment was too optimistic.
While he saw inflation undershooting its 2.0 percent target as the effects of higher energy costs fade, the minutes noted that soaring gas prices seemed likely to push up inflation to a higher extent than previously thought.
A number of utility companies have announced price hikes of as much as 20 per cent in the last few weeks.