The Bank of England voted unanimously to raise interest rates in May, hawkish minutes revealed today, and contemplated an even bigger hike than it delivered, hinting rates may rise more sharply than expected.
The Bank's Monetary Policy Committee voted 9-0 to raise the repo rate by a quarter percentage point to 4.25 per cent but also discussed a half point hike, minutes of the May meeting showed.
The minutes immediately knocked interest rate futures lower and sent sterling up more than one percent against the dollar due to concerns that the bank may raise interest rates again sooner than expected.
"The general tone of the minutes is significantly more hawkish," said Mr Howard Archer at economists Global Insight.
"We believe there is a strong likelihood that there will be a 25 basis point hike in July and it is clear that a 50 basis point hike is becoming an increasing possibility as the bank tries to get more of an impact from its monetary policy tightening," he said.