May's decision by the Bank of England's Monetary Policy Committee (MPC) to leave interest rates unchanged at 4% was unanimous for the third month in a row, the latest minutes of the MPC's meeting have shown.

But despite the 9-0 vote, the minutes also indicated fierce debate about when the next rise should be, with several members wanting a move as soon as possible.

Action now to moderate house price inflation and check the accumulation of household debt could help to reduce the risks further out

MPC minutes

The committee's forecast showed that underlying inflation - leaving out the cost of housing - would creep above the 2.5% target set by the government in the next two years.

While some committee members said raising rates could wait a while, others were keen to start taking action earlier, given the long lag between rate changes and their effect on inflation.

Interest rates are at a 38-year low, following seven cuts last year as the MPC tried to stimulate the UK economy amid the global slowdown.

Hawks vs doves

The second-guessing among economists about what the MPC will do next is unlikely to be alleviated by the new minutes.

On one hand, the unanimity suggests that a rate rise next month is unlikely.

Wadhwani: Growth could have been higher

But on the other hand the balance of the MPC is changing.

Sushil Wadhwani is stepping down from the committee at the end of May, and he is seen as one of the leading "doves" on the MPC - meaning he is less keen on rate rises.

His replacement, Royal Bank of Scotland economist Marian Bell, is thought to take a more hawkish line.

Ian Plenderleith, the Bank's executive director, is also leaving, to be replaced by internal candidate Paul Tucker.

Mr Wadhwani has criticised the Bank for persistent over-estimation of the risks of inflation.

He pointed out in a speech earlier in May that inflation had been below the 2.5% target for 34 of the past 36 months.

But the target is the centre of a symmetrical two percentage point band from 1.5%-3.5%.

A long-term undershoot is as much a problem as stubbornly high inflation, according to many observers.

Manufacturers and unions are among those who say that high interest rates which keep inflation artificially low are damaging industry.

So far, even rising oil prices have failed to spark inflation. On Tuesday, the latest figures showed underlying inflation remained unchanged last month at 2.3%.

Housing problems

But the trouble for the MPC is that manufacturing's troubles are offset by the housing boom which still dominates the UK economy.

An immediate increase in the repo rate might set confidence back and delay recovery... Any increase in the repo rate should be some way off

MPC minutes

MPC members said house price rises of as much as 16% a year are "unsustainable", according to the minutes.

"Action now to moderate house price inflation and check the accumulation of household debt could help to reduce the risks further out," they said.

"Starting to increase rates now, to offset those future inflationary pressures and to assist in the process of accommodating the planned expansion of government spending, would limit the extent to which interest rates might eventually need to increase."

But the doves warned that the MPC risked returning to the old obsession with inflation above all else in the economy.

"An immediate increase in the repo rate might set it (confidence) back and delay recovery... For these members, any increase in the repo rate might be some way off."