The Bank of England’s Monetary Policy Committee today voted to raise the official Bank Rate paid on commercial bank reserves by 0.25 percentage points to 5%.

“The UK economy has recorded its fourth consecutive quarter of firm growth. Household spending has been volatile, but the underlying picture appears to be one of moderate expansion. The recovery in business investment has been maintained. The outlook for growth in the United Kingdom’s main export markets remains positive. Credit and broad money growth remain rapid, and asset prices have continued to rise,” the Bank said.

“Although unemployment has continued to edge up, the margin of spare capacity within businesses appears limited. Oil prices have dropped back, but there are signs that other pricing pressures have picked up,” it added. “CPI inflation was 2.4% in September. It is likely that inflation will rise further above the target in the near term, but then fall back as energy and import price inflation abate.”

CIBC world Markets says that the move was fully expected and proved a bit of a non-event as it was all priced in. “The accompanying statement is not particularly revealing,” CIBC says.

“We believe that a further pre-emptive 25 bps policy tightening was justified today (just) as inflation fears persist on the MPC and considering the above trend growth environment reported for Q3,” CIBC adds. “Yet, looking further ahead, we cannot buy into a more aggressive monetary policy outlook for next year.”

“Indeed, we believe that it is not an all clear for the UK economy and we also doubt that one or two additional hikes in rates would do much to ease a buoyant housing sector,” it notes.