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Bank of England: Ranks finally broken on rates

Two members of the Bank of England's interest rate-setting committee voted to raise interest rates in August, as pressure on the central bank builds to raise rates.

Martin Weale and Ian McCafferty, widely viewed as the most hawkish members of the Monetary Policy Committee (MPC), both voted in favor of raising rates by 0.25 basis points in August, according to minutes released Wednesday.

The pound rose against the euro and dollar following the news, as traders bet that the presence of dissenters made a rise in interest rates this year more likely.

Seven other members of the nine-person committee voted to keep interest rates where they are. The two dissenters are likely to be "more outliers than bellwethers" according to Ross Walker, senior UK economist at Royal Bank of Scotland.

They argued that raising interest rates now would allow them to be raised more gradually, and that the current weak wage growth might just indicate that wages were lagging behind unemployment. The unexpectedly weak growth in wages has been cited as one of the reasons for keeping interest rates low.

Interest rates have been stuck at a historic low of 0.5 percent for half a decade now – but concerns are growing about the effect on households of mortgage payment rises when they start rising.

U.K. households are already suffering from low wage growth, although unemployment figures have been better than forecast. This has led to concerns that there is too much "slack" in the economy.

Mark Carney, the Governor of the Bank of England, has been dubbed an "unreliable boyfriend" by a U.K. politician after appearing to flip-flop on interest rates.

His most recent public pronouncements appear to suggest that there will not be an interest rate rise this year, although he has been eager to stress that interest rate rises, when they happen, will be gradual, and stay low for longer.

"The normal interest rates of tomorrow are likely to be different to the normal interest rates of yesteryear," he told reporters last week.

Most analysts are now forecasting the first interest rate rise in February 2015, or May 2015 – when there will also be a general election.

- By CNBC's Catherine Boyle.

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