The City was betting tonight that next week’s Bank of England vote on interest rates will be the tightest of calls after divisions among members of the Monetary Policy Committee (MPC) were emphasised by testimony to MPs.

After this month’s 5-to-4 split on the MPC, 56 out of 70 economists polled by Reuters predicted that the Bank of England will raise borrowing costs on Thursday for the fifth time in a year to ward off inflationary risks next year and beyond.

But uncertainty over the scale and timing of further action by the MPC was reinforced by the divergence of views among MPC members led by Mervyn King, the Bank’s Governor, in evidence to the Commons Treasury Committee.

Mr King himself, who was outvoted this month over his backing for higher rates, gave little indication that he might shift his ground.

While conceding that there was some slowing of activity in the housing market and “tentative signals [that] consumer spending may be softening”, the Governor noted that “output growth has so far proved resilient in the face of those rises in the bank rate”. “Growth has been remarkably stable for 18 months now,” Mr King added.

The Governor also reiterated his concern that inflation risks “remain to the upside [and] money and credit continue to expand rapidly”.

Despite this, some City analysts said a rate rise next week could not be seen as “a done deal”. Lena Komileva, of Tullett Prebon, said that the positions of doves and hawks on the MPC may be entrenched: “I don’t think there is scope for either camp to abandon their call.”

Rachel Lomax, the Bank’s Deputy Governor, encouraged that view with a warning against excessive tightening of rates and that it would be hard to reverse any further rise if it emerged as a move too far.

“I didn’t think there was a need for a preemptive strike in June. I am conscious of the risk of overdoing it,“ she said.

“That makes me more gradualist. I don’t believe we are behind the curve. I’d worry that being too aggressive, we find ourselves in a position where we slow things too sharply.”

Among the Bank’s doves, economists saw Paul Tucker, its markets director, as the likeliest to switch sides and swing the vote for a rate rise.

However, he left his likely call unclear, and said that he thought the Bank’s present stance already meant it was “in an appropriate position to bear down on inflation in the medium term”.

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