Markets have moved to price in higher borrowing costs in the wake of strong inflation data but investors took King’s comments as a sign that the BoE was in no rush to hike rates.

"A rate increase does not appear to be on the agenda unless there are signs the period of high inflation looks as if it’s lasting for longer than the Committee currently thinks," said Philip Shaw, an economist at Investec.

The June minutes showed arch-dove David Blanchflower felt a quarter-point cut was needed to prevent the "small but growing risk of a very negative outcome (on the economy) that would cause inflation to undershoot."

Some others members, probably Andrew Sentance and Timothy Besley, thought the news over the month suggested that rates might need to rise.

"If there were a serious threat to medium-term inflation expectations then a pre-emptive rise in rates would be appropriate," the hawks argued. "Delay would only increase the eventual costs of bringing inflation back to target."

For now, they felt there were a number of arguments against hiking rates, including signs the credit crunch was hitting the economy, not wanting to surprise markets and that medium-term inflation expectations were still stable.

The majority judged that while strong official data on consumer spending was puzzling, they still thought economic growth slowed in the second quarter in line with their May forecast.

(Reporting by Sumeet Desai and Matt Falloon; Editing by Malcolm Whittaker)