Britain's central bank left interest rates unchanged on Thursday but analysts say growing inflationary pressures mean higher borrowing costs are likely before the end of the year.
The decision to leave rates at 4.75 percent was widely predicted after last month's surprise rate hike and prompted little reaction from markets, leaving them to concentrate on an expected announcement this afternoon of a departure date for UK Prime Minister Tony Blair.
Nevertheless, with the economy growing robustly, inflation above target and house prices showing little sign of cooling, most economists think another rate rise is just a matter of time. Money markets show investors fully expect rates to rise to 5 percent in November when the bank issues new forecasts on growth and inflation.
September is not a popular month for interest rate changes. Since the Bank of England was granted independence in 1997, it has only changed rates in a September twice. This compares with five rate changes in both August and November, months that coincide with the bank's quarterly inflation report.
Minutes of last month's meeting showed policymakers were worried about the second-round effects of higher energy prices. Halifax data showed house prices rose a punchy 1.0 percent last month alone, while rival lender Nation-wide also reported a robust 0.8 percent rise in August.
Nevertheless, there have also been signs activity is starting to cool. Business confidence in Britain's services sector fell in August to its lowest since the start of the Iraq war. The impact of a slowing US economy and the pound's recent strength on the foreign exchanges also argue against a further increase in borrowing costs.