Minutes released on Wednesday showed that the Bank’s monetary policy committee voted 7 to 1 at its meeting on April 6 to keep interest rates unchanged at 4.5 per cent.

For the fifth consecutive month the lone dissenter was Stephen Nickell, one of the MPC’s external members. Mr Nickell continued his quest for a 0.25 percentage point cut, again expressing the view that spare capacity in the economy and a lack of evidence that high energy costs have pushed through to consumer prices meant inflation was likely to fall below its 2 per cent target.

However, the majority on the committee – down from 8 to 7 after the departure to the CBI of Richard Lambert – felt less able to draw a conclusion on the degree of spare capacity in the economy. The level of spare capacity is important because it gives an indication of how much industry can expand before it begins to contribute inflationary pressures.

Most on the MPC were also less sanguine than Mr Nickell about the potential second round effects of high energy prices. Though up till now most of the increase in input costs have been absorbed by producers, recent data has shown factory gate prices starting to climb.

But it is the public’s perception that energy prices are boosting inflation that may be of greater concern. The minutes noted that consumer’s “inflation expectations had picked up in recent surveys and needed to be monitored carefully.”

On Tuesday the Bank released its quarterly survey of public inflation expectations, which showed people think prices are rising at an annual rate of 2.8 per cent. The last reading of the consumer price index showed inflation matching the Bank’s target of 2 per cent. The number for March is out on Thursday.

The public’s expectation of inflation is important because it may determine wage demands and lead to worries about high inflation becoming a self-fulfilling prophecy.

However, despite these concerns the MPC noted that wage settlements at the beginning of the year had shown no signs of an increase on the previous year.