The Bank of England voted by a margin of eight to one for this month's quarter point increase in interest rates.

The minutes of the monetary policy committee reveal that the majority of its members believed the rate rise was necessary to ensure inflation remains on target.

But the decision was not unanimous as some had expected.

"It was important that policy should remain forward-looking, so the present decision should be based on the committee's assessment of the prospects for inflation and associated risks," said the minutes of the meeting.

"Most members thought that a modest rise in the repo rate was now appropriate. This view was supported by a number of arguments, to which different members gave different weights. The forecast suggested that inflation would be above the target and rising at the forecast horizon," added the minutes.

Whilst the minutes suggested further rate rises were likely, the committee stressed that it would be "appropriate to move interest rates cautiously".

Analysts expect a series of rate rises over the coming two years.

It is thought they will peak at around five per cent by early 2005.

Figures released on Tuesday revealed that inflation has fallen by 0.1 per cent over the last month - but still remains slightly above the chancellor's target of 2.5 per cent.

The minutes also reveal that the monetary policy committee assessed that failing to increase rates would have led to a further rise in the level of consumer debt.

"If rates were not raised household borrowing would be more likely to continue to grow at a rate that would eventually prove unsustainable, and therewould be a greater risk of a sharp downward adjustment to house prices if they became more overvalued, complicating the operation of monetary policy," noted the minutes.