UK interest rate rise 'highly probable'

A November hike in interest rates looked certain today after it emerged two Bank of England policymakers pressed for a rise to 5% earlier this month.

Andrew Sentence and Professor Tim Besley - both recently-appointed members of the nine-strong Monetary Policy Committee (MPC) - argued that an early rate rise might reduce the need to make a larger increase later on.

Other members of the committee placed "considerable weight" on the arguments for a rise, but the pair were outvoted 7-2 as it was felt an increase might fuel speculation that further increases could be in the pipeline.

City of London analysts believe it is now likely that the Bank of England will follow its quarter-point rise to 4.75% in August with another increase next month.

Howard Archer, chief UK and European economist at Global Insight, said: "A quarter-point interest rate hike in November now looks highly probable.

"Not only did two MPC members vote for a rate hike in October, but the minutes of the meeting reveal that other MPC members had considerable sympathy with the case for higher interest rates."