Bank of England Governor Mervyn King and three other policymakers opposed this month's decision to hold interest rates at 5.5% and called for a hike, boosting expectations that borrowing costs will rise next month.
King, Deputy Governor John Gieve, Tim Besley and Andrew Sentance were outgunned by the remaining five members including Rachel Lomax, the other deputy governor, and Charles Bean, the chief economist, minutes of the June 6-7 meeting showed on Wednesday.
It was only the second time in the Monetary Policy Committee's decade-long history that the governor has been on the losing side of a rate decision. The first was the August 2005 rate cut when King had wanted no change.
Most experts had thought that at most only two members -- superhawks Besley and Sentance -- would have voted for a hike so soon after a May rise and the pound jumped as markets priced in a greater chance of rates hitting 5.75% next month.
"We got this one badly wrong, having expected a unanimous vote for an unchanged rate," said Daragh Maher, senior FX strategist at Calyon. "The market has justifiably moved to attach a greater than 50% chance to a July move."
A Reuters poll after the minutes were published showed 44 out of 64 economists are now predicting a quarter-point hike in July and a 40% probability of a rise to 6% by the end of the year.