The majority of Bank of England policymakers voted to keep rates steady at 5% at its July meeting, but one voted for a cut and another for a rise.

The surprise split underscores the challenge faced by the Bank's Monetary Policy Committee (MPC) as it balances rising inflation with slowing growth.

Minutes of the meeting on 9-10 July showed that Timothy Besley wanted to raise the cost of borrowing to 5.25%.

David Blanchflower voted to reduce rates to 4.75%.

The vote for a rise in interest rates surprised financial markets.

"For all members of the committee, the decision was a difficult one," the minutes said.

"A rate change this month would be a surprise at a time when credit and other financial markets remained fragile," it added.

It said that inflation in June had been higher than expected but that data also suggested that growth was continuing to slow.

The MPC has nine members.