In years and decades of having covered and watched Monetary Policy Committee votes, last week’s decision to hold benchmark UK interest rates at 5.25% was one of a fairly small number of big surprises.

That said, halting the relentless run of rate rises seemed overdue. And especially so given the worry that much of the effect of the long sequence of interest-rate increases up until August has yet to be felt. Base rates were at an all-time low of 0.1% as recently as December 2021.

Of 65 economists polled by Reuters between September 11 and 13, nearly all forecast a further quarter-point rise in UK base rates at the MPC’s meeting last week, with only one projecting no move.

The margin by which base rates were held last week was wafer-thin, with a five-to-four vote.

Bank of England Governor Andrew Bailey was among those who voted to hold base rates. He was one of four of the six MPC members who voted successfully to raise base rates to 5.25% at the August meeting who decided there was a case for standing pat last week.

READ MORE: Ian McConnell: He can talk all he likes but nothing much will change

Swati Dhingra, an external member of the MPC, has been voting to hold rates for a while now and continued to do so.

Moving to a hold stance along with Mr Bailey were three other Bank of England staffers, deputy governors Sir Dave Ramsden and Ben Broadbent and chief economist Huw Pill.

Another Bank deputy governor, Sir Jon Cunliffe, was one of four MPC members to vote unsuccessfully for a quarter-point rise in base rates to 5.5% last week. He was joined by three external MPC members, Megan Greene, Jonathan Haskel and Catherine Mann.

Mr Haskel and Ms Mann had voted unsuccessfully to raise UK base rates by a half-point to 5.5% at the August meeting, so their stance last week came as absolutely no surprise.

What was perhaps most interesting in the minutes was the tone of most of those voting to hold rates. Within this group, although individual members are not named when it comes to the deliberations outlined in the minutes, it appears that Ms Dhingra stands out as being significantly more dovish than the rest.

The minutes state: “For most members within this group, the latest developments meant that the judgement to keep Bank Rate unchanged at this meeting rather than increase it was finely balanced. Conditions were likely to warrant a restrictive policy stance being maintained until material progress had been made in returning inflation to the 2% target sustainably.”

They add: “For one member, however, the risks of overtightening policy had continued to build, increasing the likelihood of output losses and volatility that would require sharper reversals of policy. Lags in the effects of monetary policy meant that sizeable impacts from past rate increases were still to come through.”

It was no surprise therefore, given the insight into the thinking of most of those who voted for no change last week, that the Bank of England’s September monetary policy summary as well as the minutes signalled that the door remained wide open for another rise in UK base rates, depending on how things evolved.

Both the monetary policy summary and the minutes of the committee meeting state: “The MPC will continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including the tightness of labour market conditions and the behaviour of wage growth and services price inflation. Monetary policy will need to be sufficiently restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term, in line with the committee’s remit. Further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures.”

So, while base rates are highly elevated in a post global financial crisis context, there looks to be no sign of short-term relief for those households and businesses struggling with higher borrowing costs.

Returning to the minutes of the meeting, those voting to hold base rates noted signs of an easing of the labour market.

The minutes state: “There were signs that the labour market was loosening. The recent acceleration in the AWE (average weekly earnings) was noteworthy but was not apparent in other measures of wages. Although it was important not to put too much weight on a single data point, headline and services CPI (consumer prices index) inflation had fallen back and were lower than had been expected. Regarding activity, contacts of the Bank’s agents had become more downbeat, and the output PMI (purchasing managers’ index) in August was now consistent with falling GDP (gross domestic product).”

Another noteworthy matter in the MPC minutes was what sounded like a distinctly hawkish tone on rates from the four MPC members pushing for another rise in base rates last week.

READ MORE: This fine town has challenges but a great deal going for it

And what was particularly interesting from this camp was an acknowledgement that “the monetary stance was weighing increasingly on economic activity”.

The minutes state: “Four members judged that a 0.25 percentage point increase in Bank Rate, to 5.5%, was warranted at this meeting. Although there were now some signs of weakening economic activity, consumer sentiment appeared to be holding up, real household incomes had started to rise, and forward-looking indicators of output had remained positive. The labour market was still relatively tight, consistent with a possible rise in the medium-term equilibrium rate of unemployment, and the pace of loosening had been slow.

READ MORE: Ayr Station Hotel must not be demolished after fire

“Measures of wage growth and services inflation had remained at rates above those consistent with meeting the 2% target sustainably in the medium term. While services CPI inflation had fallen by more than had been expected in the latest data release, this appeared to have been driven mainly by volatile components and had followed recent upside surprises.”

The minutes add: “These members judged that overall there was evidence of more persistent inflationary pressures. Although the monetary stance was weighing increasingly on economic activity, a 0.25 percentage point increase in Bank Rate at this meeting was necessary to address the risks of more deeply embedded inflation persistence and bring inflation back to the 2% target sustainably in the medium term.”

This brings us to the crux of the debate - to what extent is it acceptable to depress economic activity and thereby risk higher unemployment in the name of tackling inflation?

Given that inflation looks to be very much a supply-side problem, with households and businesses in general under much greater strain, the focus should be on promoting rather than dampening growth, especially given the UK’s protracted miserable economic performance and with the output PMI consistent with declining GDP.