GETTYInterest rates could soon rise, experts are warning
The Bank's Monetary Policy Committee (MPC) voted to hold the base rate at 0.25 per cent, but said a hike is set to happen sooner than households and markets expect.
Experts now think there is a major chance that interest rates could rise to 0.5 per cent in November.
A hike would raise the cost of credit, mortgages and borrowing - but should also lift saving returns and help bring down inflation.
In a statement the MPC said: "A majority of MPC members judge that, if the economy continues to follow a path consistent with the prospect of a continued erosion of slack and a gradual rise in underlying inflationary pressure then, with the further lessening in the trade-off that this would imply, some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target."
MPC member Michael Saunders recently warned that if interest rates don't rise soon, families could be hit by steep and painful hikes later down the line.
Mr Saunders and another MPC member Ian McCafferty again called for rates to rise in September.
It's thought chief economist Andy Haldane may vote for a rate hike in the coming months - with some critics speculating that Mr Carney may even soon use his vote to call for a rise.
It comes as the cost of living hit 2.9 per cent, while employment data this week showed the jobless rate is at a 42-year low, with the economy continuing to grow since the Bank of England cut rates after the Brexit vote in August last year.
After the latest MPC meeting, the pound to euro exchange rate surged, as markets raised the likelihood of a rate hike in 2017 or early 2018.
Rhys Herbert, senior economist at Lloyds Bank Commercial Banking said: “While the MPC voted seven to two to leave interest rates unchanged for now, some of the accompanying comments were decidedly ‘hawkish’.
"In particular, that a majority saw scope for a removal of some stimulus in coming months.
"The near-term policy debate is very much alive and the November meeting, when the Bank will update its forecasts, is shaping up to be very interesting."
Kathleen Brooks, research director at City Index, said: "The Bank of England may have left rates on hold and the vote split may have stayed at seven-two, however, the tone of the statement was definitely more hawkish, and the prospect of a November rate hike is now a real possibility, in our view.
"We tend to assume that the BOE will make any major move at a meeting when the Governor presents the Inflation Report, which leaves November or February.
"Surely, if inflation is rising and the labour market continues to create jobs at its current clip then November could be key?"