The Bank of England eased its foot off the accelerator slightly on Thursday as it raised interest rates to a 14-year high, but experts expect more to come in the new year.

The Monetary Policy Committee (MPC) chose to increase the rate from 3% to 3.5%, despite inflation easing.

The rise was slightly less than the 0.75 percentage point increase the Bank announced a month ago, and was far from unanimous.

Three members of the MPC voted for a different outcome, suggesting a split which could foreshadow a slowdown in increases next year.

Swati Dhingra and Silvana Tenreyro both voted against any rise at all, rather than a smaller 0.25 percentage point increase.

Rates have been raised in every meeting since late last year when they were 0.1%, as the Bank tries to get inflation under control.

The MPC said a “forceful” policy response was justified as the labour market remained tight across the month.

There are also signs that inflationary pressures could stick around for longer than thought, it said.

While the Bank said that more rate increases “might be required”, analysts believe they might slow to a stop within the next couple of meetings.

Martin Beck, chief economic adviser to the EY Item Club, said the minutes of the MPC meeting gave the impression that there are more increases to come.

But he does not expect rates to hit more than 4%, as inflation is likely to have passed its peak and a possible recession would ease pressures in the labour market.

“In these circumstances, the EY Item Club thinks the need to continue to significantly raise interest rates will soon fade and it is perfectly possible that another increase in the February meeting could be the last one for this cycle,” he said.

On Wednesday, the Office for National Statistics (ONS) revealed that inflation had reached 10.7% – slightly lower than expected and a reduction from the 41-year high seen in October.

The MPC is tasked with trying to get inflation under control, to 2% if possible.

The Bank also said the economy is now expected to do better in the final three months of 2022 than it had previously thought.

Gross domestic product (GDP) is forecast to fall by 0.1% in the fourth quarter, compared with the previous forecast of a 0.3% drop.

Ms Dhingra and Ms Tenreyro – who voted against the 0.5 percentage point rise- argued that the impacts of recent rate increases have not yet been seen in the real economy as they take time to feed through.

“The real economy remained weak, as a result of falling real incomes and tighter financial controls,” they argued.

“There were increasing signs that the downturn was starting to affect the labour market. But the lags in the effects of monetary policy meant that sizeable impacts from past rate increases were still to come through.”

Therefore, they said, rates as they currently stand should be “more than sufficient to bring inflation back to target”.

Another MPC member – Catherine Mann – argued at the meeting for a 0.75 percentage point rise, to 3.75%.

She said that, while inflation is easing, she saw evidence that rising prices and wages will keep putting pressure on inflation.

ING developed markets economist James Smith said: “The Bank of England’s 50 basis point (bp) rate hike decision was coupled with signs that the Committee is prepared to move more cautiously over the coming months.

“We expect a final 50bp hike in the first quarter – which may ultimately be delivered in smaller 25bp chunks – although we think the UK will be slower to turn to rate cuts than the US.”

The news comes a day after the US also voted for a 0.5 percentage point increase in interest rates.