BANK of England rate-setters have dampened expectations of a first hike not taking place until the end of next year after revealing increasing concerns over rising inflation.

Members of the monetary policy committee (MPC) voted by a seven to two majority to keep rates on hold at 0.5 per cent.

However, minutes of the meeting revealed among the majority "there was a material spread of views on the balance of risks to the outlook".

Some of those were concerned should interest rates follow expectations of a hike towards the end of 2015, there could be a risk of inflation breaching the Bank's two per cent target.

This was because, they argued, wasteful "spare capacity" holding back the economy - a key measure for policy makers - could be used up more quickly than expected, amid strong jobs growth.

Inflation is at a five-year low of 1.2 per cent, but the MPC must consider how it will change over the next few years.

MPC dissenters Martin Weale and Ian McCafferty continued to argue rate-setters should "look through" temporary effects such as exchange rates and raw material prices which have pushed the latest inflation rate down - and backed a 0.25 per cent hike now.

Bank Governor Mark Carney has signalled the UK's economic recovery means the time for a rate rise is nearing.

But the gathering global gloom from a stagnating eurozone and slowing Chinese growth, coupled with the low-inflation picture in the UK, have recently added to expectations a hike will not come until well into next year.