Stephen Nickell remained in a minority of one for a fifth month on April 6 when the Bank of England's Monetary Policy Committee voted to leave its official interest rate unchanged at 4.5 per cent, where it has been since last August.

Mr Nickell, leaves the interest-setting committee at the end of next month, so the next meeting on May 3 and 4 will be his last. This raises the prospect that opposition to the case he has argued for slightly cheaper money will become unanimous.

This month, the committee was down to eight members, after the departure of the former Financial Times editor Richard Lambert to succeed Sir Digby Jones as director general of the CBI. Mr Lambert will be replaced by a labour market specialist, Professor David Blanchflower, on June 1.

Minutes of the April meeting published yesterday show that Mr Nickell stressed the lack of any evidence of the leap in energy prices spilling over into pay deals to unleash an inflationary "second round price impact".

On the contrary, higher energy costs, combined with rising taxes, were likely to squeeze people's spending power at a time when there is already spare capacity in the labour market.

Calling once again for a quarter-point cut in interest rates, Mr Nickell predicted that this would cause inflation to fall modestly below the Bank's two per cent target in the coming months as the immediate impact last year's oil price increases drops out of the 12-month measure.

Other committee members, who voted once more for no change in interest rates, debated the extent to which spare capacity has developed in the British economy. But they noted recent opinion surveys showing widespread and growing expectations that inflation is likely to quicken in the coming months.

They also saw "upside risks" from rising energy prices - although they were meeting before the recent spurt that carried Brent crude above $72 a barrel. The committee agreed that wage settlements in January and February appeared to be showing no signs of any increase from a year earlier.

They accepted that the latest numbers were "consistent with some modest loosening" in the labour market. The number of people in work had grown over the past year, but not fast enough to prevent a small rise in unemployment.

Although inflation in prices paid by producers, and those passed on to consumers, were little changed, committee members said rising inflation expectations in recent surveys "would need to be monitored carefully". The Bank's latest quarterly survey found these expectations at their highest level in seven years.

The committee also noted that since their previous meeting in early March share prices had risen strongly, house price inflation had remained at a quarterly rate of around two per cent and the exchange rate had fallen by more than one per cent.

These factors together suggested that asset prices "were likely to be supportive for UK d emand growth going forward".

The minutes also showed that the committee now believes the British economy is rebalancing away from domestic consumption and towards other types of spending, particularly net exports. Such a rebalancing would have little impact on inflationary pressures at home.

Overall, the minutes continue to indicate that interest rates will stay put for the time being unless the economic backdrop changes significantly one way or another.

Elsewhere, the committee concluded that the British economy had grown around its long-term trend of 2.5 per cent in the last two quarters, and that recent interest rate increases in other major economies "had not caused any disturbance in financial markets".

The world economy "continued to be relatively strong" and the growth in global demand growth looked set to "remain robust" throughout 2006.

The Bank's regional agents had suggested that exporters were optimistic.