The Bank of England appears set to raise interest rates in the coming months for the first time in more than three years after minutes of its last meeting were released today.
All nine members of the Monetary Policy Committee voted to keep rates steady a fortnight ago, but some of them were torn between keeping borrowing costs at their 48-year low of 3.5 per cent and taking back the cut they had made in July.
In particular, some committee members who had opposed the July reduction were concerned the current pace of consumption and debt build-up was unsustainable, suggesting that "an increase in interest rates might soon become necessary".
Economists said tomorrow's retail sales report could prove key for the policy outlook over the next few months. They are, on average, predicting no sales growth in August, but a big jump in volumes could push the some hawks into openly calling for a rate rise.
Some within the Bank of England are increasingly worried that consumers are borrowing too much money and are not budgeting for any change in circumstances and that this could store up big problems for the future.