Bank minutes to show split vote again

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Analysts polled by Reuters predicted an 8-1 vote for keeping rates pegged at 5 percent when minutes of the July 9 and 10 meeting are published on Wednesday with Blanchflower being the sole voice in favour of a cut for the third month running.

"Other than David Blanchflower backing a cut for the 10th successive month, serious talk of rates coming down now seems unlikely, and we expect another 8-1 vote," said Philip Shaw, chief economist at Investec.

Blanchflower said in an interview with the Guardian this week that the economy was probably already in recession and policymakers needed to bring interest rates down quickly.

Some MPC members, however, even thought about raising rates in June given inflation is so far above the central bank's 2 percent target - increasing the chances of a three-way split when the vote is revealed.

But while inflation has surged even higher, news on the economy has been dire, raising the risk of more members coming round to Blanchflower's view - if not now, soon.

Kate Barker appears to be one of the most likely. She said last week that policymakers need to be conscious of keeping policy too tight.

Policymakers accept that inflation is going to be high for a while yet - high food and fuel prices will see to that. The question for them is where inflation might be in two years or so as the economy is expected to slow sharply.

Deputy Governor John Gieve also noted last week that the rise in market interest rates had all but wiped out the effect of the Bank's last three rate cuts.

The Bank's new chief economist, Spencer Dale, meanwhile, has just returned from the United States and may also be more focused on risks of the UK experiencing a downturn like that suffered by the U.S. economy. To combat this, the Federal Reserve carried out an aggressive campaign of rate cuts until April 30, since when the benchmark overnight fed funds rate has stood at 2 percent.

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