One Bank of England policymaker wanted to hike rates this month, another wanted a cut but the remaining seven chose to keep borrowing costs steady as both the inflation and growth outlook had worsened.
Minutes of the July 9-10 policy meeting, released today, show that arch hawk Timothy Besley wanted an immediate, credibility boosting quarter-point hike to 5.25% and dove David Blanchflower arguing a cut was needed to prevent a recession.
That produced the first three-way split on the direction of rates since May 2006 and the decision was 'a difficult one' for all nine policymakers given inflation was likely to turn out higher and growth lower than the Bank had thought in May.
'Keeping rates at 5% when the economy was slowing was arguably already sending a strong signal of the Monetary Policy Committee's commitment to reducing inflation,' the minutes said.
'A rate change this month would be a surprise at a time when credit and other financial markets remained fragile, and any change in rates would be better communicated alongside the Bank's August Inflation Report,' they added.
Analysts had forecast an 8-1 vote for steady rates this month, with Blanchflower wanting a cut.
Most UK economists expect interest rates to stay on hold for some time before eventually falling as the economy slows, but the minutes show there is little broad-based support for rate cuts while inflation is so far above the central bank's target.
