The Bank of England's Monetary Policy Committee maintained its 6-3 split in favour of keeping UK rates on hold this month, minutes of its March 9-10 meeting showed today.
The bank said there was a 'significant risk' that UK inflation could exceed 5% in the coming months, but it was too early to tell how strongly the economy was recovering after a surprise contraction at the end of last year.
While business surveys pointed to some recovery, consumer spending and sentiment had weakened sharply, the minutes said.
The BoE said the recent rise in oil prices, fanned by tension in the Middle East and North Africa, had increased adverse risks to both inflation and growth.
'The balance between the upside and downside risks to the medium-term inflation outlook had probably not shifted significantly over the month,' policymakers concluded.
BoE chief economist Spencer Dale and external MPC member Martin Weale both voted for a quarter-point hike - as they did in February. Andrew Sentance, who has long been the committee's most hawkish member, maintained his call for a 0.5 points rate rise.
The remaining six members voted to keep rates on hold at 0.5%, where they have stood since March 2009, and Adam Posen reiterated his lone call for an additional £50 billion of quantitative easing.
There were differences even among those who voted to keep rates on hold. Some thought the risks from higher inflation expectations remained limited while others thought the risks had risen and the case for a rate rise had strengthened in recent months.
Official data on Tuesday showed that annual consumer price inflation surged more than expected in February to a 28-month high of 4.4%.
Bank body reports surge in switching
Meanwhile, figures today showed that the number of people re-mortgaging in the UK rose to a 19-month high during February as homeowners braced themselves for interest rate rises.
A total of 27,144 people switching to a new deal had their loan approved during the month, the highest level since July 2009, according to the British Bankers' Association.
The group said homeowners appeared to be keen to take advantage of the competitive deals that were currently available, after recent high inflation figures have stoked expectations that the Bank of England may raise interest rates sooner than previously thought.
But activity in the housing market remained subdued, with just 29,923 mortgages approved for house purchase, slightly ahead of January's figure, but 11% down on the same month of 2010. It was also significantly below the level of 70,000 to 80,000 approvals a month that are thought to be consistent with a stable housing market.
