UK interest rates stay on hold but Bank of England hints at rise

Pound up as two members of monetary policy committee vote for quarter-point increase

The chances of a May rise in interest rates have increased sharply after two members of the Bank of England's monetary policy committee voted for an immediate hike in borrowing costs.

Sterling rose on foreign exchanges on news that Ian McCafferty and Michael Saunders had backed a quarter-point rise in the bank rate to 0.75%.

One of Gordon Brown's first moves as chancellor in 1997 was to hand control of interest rates to an independent Bank of England. Previously the cost of borrowing had been decided between the chancellor and the governor of the Bank.