The men and women who set interest rates in the UK earlier this month voted overwhelmingly in favour of leaving interest rates unchanged at 4%, minutes of the rate decision meeting show.

The Bank of England's Monetary Policy Committee voted eight to one in favour of the no-change decision, its eight in as many months.

The minutes are no surprise," said Investec chief economist, Philip Shaw.

Deputy Governor of the Bank, Mervyn King was alone in calling for a rate hike, citing rising inflation concerns in the medium term.

Morgan Stanley UK economist, Mark Miller, said it was a "slight surprise" that Mr King had not withdrawn his 0.25 percentage point rate rise proposal.

Historically low

UK interest rates are at their lowest level for about 40 years, but analysts still expect the Bank to start raising rates later in the year.

"There are still economic arguments for raising rates later this year, but obviously stock markets have fallen since the July meeting and my view is that rates will stay on hold in August," said Mr Miller.

"Most members concluded that the news on the latest month had left the most likely outlook for inflation little changed, although perhaps implying a greater downside risk than before," the minutes noted.

"It was not yet necessary to raise interest rates, and there was a possibility that an increase in interest rates at this point could have an unusually sharp impact on business and consumer confidence," they added.

Most members believed recent falls in the stock markets justified the no-change decision.

"The likely effects of this on consumption and investment needed to be taken into account," they argued.

Mr King proposed that the stock market weakness should not unduly influence the committee's decisions, just as rising house prices have failed to do.

Welcome decision

When the MPC took the decision to leave rates unchanged, it had been expected by most financial experts and was welcomed by industry officials, despite calls from some observers for higher rates to cool the housing market.

"This is the right decision, it is clear that there is little generalised inflationary pressure in the economy," Ian McCafferty, the Confederation of British Industry's chief economic adviser, said at the time.

Stephen Radley, chief economist at the Engineering Employers Federation, said: "We applaud the [Bank] for taking in the wider picture and not being swayed by the current panic over the housing market."