The Bank of England's rate-setting committee is divided on the risks facing the U.K.'s economy, with two members continuing to vote for a hike in interest rates, minutes of its latest policy meeting revealed.
November marks the fourth month that committee members Martin Weale and Ian McCafferty - widely viewed as the most hawkish members of the Monetary Policy Committee (MPC) - voted for a change in policy.
Sterling rose against the dollar following the publication to trade around $1.5647.
The pair argued for an increase in the main interest rate by 25 basis points, while the remaining seven members of the committee voted to maintain the rate at its current record low of 0.5 percent.
"For most members, the outlook for inflation in the medium term justified maintaining the current stance of monetary policy," the minutes said, but also noted a "material spread of views on the balance of risks to the outlook" within the group.
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One such risk was that growth could soften more than expected, and inflation could remain below the central bank's target of 2 percent for longer than forecast.
Figures published Tuesday revealed that U.K. inflation came in at 1.3 percent year-on-year in October, up from September's five-year low of 1.2 percent. It comes after the BoE last week warned that inflation was "more likely than not" to fall below 1 percent over the next six months.
"In that case, a premature tightening in policy would leave the economy vulnerable to shocks, with the scope for any stimulus that subsequently became necessary being limited by the effective lower bound on interest rates," the minutes said.
On the other hand, however, there is a risk that the degree of spare capacity would be eliminated faster than expected.
"That would potentially result in inflation rising to, and subsequently overshooting, the 2 percent target. Individual members ascribed materially different probabilities to these risks," the minutes added.
The MPC meeting minutes are closely watched by investors for hints as to when the central bank might increase interest rates in the U.K. Economists have pushed back their rate hike expectations over recent months, to the end of 2015 rather than the beginning, following weaker-than-expected growth and inflation figures.
Howard Archer, chief U.K. economist at IHS Global Insight, said the minutes of November's MPC meeting were not quite as dovish as expected, however. He flagged that the MPC had acknowledged that any spare capacity in the economy could be used up more quickly than assumed.
"While the November MPC minutes are unlikely to hugely dilute increased expectations that the Bank of England will not be raising interest rates before late-2015, they suggest that a move around August is still possible," Archer said in a note.
- By CNBC's Katrina Bishop