Sky-high expectations of another rise in UK interest rates rose further yesterday when it emerged two of the nine-strong Monetary Policy Committee voted unsuccessfully for an immediate increase two weeks ago with others appearing poised to follow.

Minutes of the Bank of England committee's April 4 and 5 meeting, published yesterday, showed external MPC members Tim Besley and Andrew Sentance had resumed their push for a rate rise, having abandoned this briefly last month during a stock market sell-off which has since been more than reversed.

Fellow external member and MPC arch-dove David Blanchflower, meanwhile, abandoned his push, made in March, for an immediate quarter-point cut in rates.

The decision to hold base rates at 5.25% was thus based on a seven-to-two vote, with the three-way split envisaged by some economists failing to materialise because of Blanchflower's shift into neutral gear.

The City began to view as a done deal the fourth rise in UK base rates this cycle coming on May 10 when it emerged on Tuesday that Bank governor Mervyn King had had to write the first ever letter to the UK chancellor explaining why annual inflation is so far above target.

His letter to Gordon Brown was prompted by an unexpected leap in annual UK consumer prices index inflation from 2.8% in February to 3.1% last month - taking it more than one percentage point away from the 2% target.

Minutes of the April MPC meeting state that "for some members, there was no compelling case for a change in interest rates this month".

More significantly, and more hawkishly, they indicate others who voted for no change two weeks ago were merely biding their time, until the MPC's next quarterly inflation report in May, before pushing for further tightening. Firms' ability to push through price rises was cited as a key danger.

The minutes state: "Other members also concluded that no change in bank rate was warranted this month, but that the balance of risks to inflation remained on the upside in the medium term, as had been highlighted in the February (inflation) report. Domestic demand continued to grow robustly. Manufacturing and service sector producer-price inflation was running at an annual rate of around 3% - an unusual conjunction. If that were to persist for any length of time, it seemed incompatible with achieving the inflation target in the medium term.

"Nevertheless, there was only a limited expectation of a move in Bank Rate this month Any change would also be better explained in the context of the May inflation report projections."

Referring to Besley and Sentance, the minutes state: "Some other members also thought that the balance of risks to the outlook to inflation was on the upside, and that these were sufficiently strong to warrant an immediate rise in bank rate of 25 basis points. These members thought the fundamental determinants of consumption remained firm, that business investment and global demand were strong, and that profitability was very healthy. Survey evidence suggested a shift in sentiment on the part of firms about their ability to push through price increases. So overall, demand pressures were likely to add to existing tight capacity pressures, slowing the reduction in CPI inflation in the short term and adding to medium-term risks. Developments in money, credit and asset prices also posed an upside risk to inflation in the medium term."

Forty-nine of 51 economists polled by news agency Reuters in the wake of the inflation figures on Tuesday forecast that the MPC would implement the fourth quarter-point increase in base rates this cycle when it meets next month.

And economists saw a significant chance of the cost of borrowing going higher still by the year-end.

The poll put the probability of rates rising to 5.75% or higher by the year-end at a punchy 35%, and financial markets are pricing in fully two quarter-point increases between now and November.

The MPC was not particularly perturbed this month about the big rise in default by those customers with poorer credit ratings served by the US sub-prime mortgage market, with committee members seeing little danger of contagion.

The minutes state: "(US) sub-prime mortgages constituted around 10% (to) 15% of the market, and the proportion of those loans in arrears of 30 days or more had picked up to around 13% of sub-prime borrowing in 2006 Q4. Around a third of sub-prime mortgages were due to have their inter- est rates reset upwards this year, so it was probable that delinquency rates would rise.

"But the direct impact of these developments on the wider economy seemed likely to be moderate. The affected households constituted a small proportion of the total, and these were likely to be low-income households, whose impact on aggregate spending would be correspondingly low."