The Bank of England should press ahead today with another rise in interest rates, pushing borrowing costs to a new six-year high, to ensure that the inflation target is met, The Times Monetary Policy Committee recommends this morning in a close five-to-four vote.

After eight of the nine members of the Times panel of economic and financial experts called last month for the Bank to hold fire, with just one voting for a rate rise, its backing for a fifth increase in base rates in 11 months comes after four more members swung behind the case for a further tightening of policy.

The stark five-to-four split on The Times MPC mirrors the deep divisions between hawks and doves on the Bank’s own rate-setting committee, with sharp differences of view in both groups over prospects for growth and inflation and the key issues confronting the economy.

Reflecting the intense debate within the Bank, the hawkish faction among The Times panel argued that a further rate increase is needed to curb inflationary risks, while a more doveish group pointed to signs that the Bank’s previous rate increases are already having a clear impact.

Among The Times MPC’s hawks, Bronwyn Curtis said that she remained worried that expectations of future inflation among households and companies are “drifting upwards”. With a strong global outlook, resilient stock markets and signs that the economy is still growing at a rapid annual rate of about 3 per cent, she argued for a “precautionary” rate rise. This should slow consumer spending that had “so far failed to respond to tighter policy”, she suggested.

Sir Alan Budd said that with a rise generally expected, the Bank “might as well move now . . . They can then pause to see whether the slowdown in income growth is followed by a slowdown in consumer spending which will help to reduce inflationary pressures.”

Claudio Costamagna said that the strength of the economy suggested a that further rate rise “would tackle inflationary pressures with little impact on economic activity”.

A fellow hawk, Rupert Pennant-Rea, said that confounding markets’ strong expectations of a rate rise today would “damage the MPC’s credibility just when it is starting to recover from a weak patch”.

Anatole Kaletsky said: “At least one more rate increase is clearly necessary to be reasonably confident of hitting the inflation target – and if a rate increase is necessary, I can see no conceivable argument for further delay.”

The doveish element of the panel insisted, however, that there was little urgency. “With four hikes under our belt, I see no pressing case for raising rates this month,” Geoffrey Dicks argued. “If rates do need to go up again, the August [Bank] forecast round would be the right time.”

Sir Steve Robson agreed. “A couple of months’ delay would not affect where rates eventually peak,” he said. “There are further signs of the developing impact of the last four rate rises, including in retailing, and with house prices slowing. It is worth seeing whether this develops momentum.”

Martin Weale agreed that “we are starting to see evidence of a slowing economy, with consumption growth limited by weak disposable income”.

While Mr Weale said that there were arguments for rates to rise this month, including precautionary action, lax credit conditions and a still buoyant housing market, the question was: “What’s the rush?”

Sushil Wadhwani, too, detected “further signs of moderation in consumer demand”. Although money supply had been growing fast, he suggested that it was important not to place too much weight on this. “With inflation likely to fall this year, there is time to wait and see what impact there will be from the four hikes already made,” he said.

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