Another Bank of England interest rate cut this year is looking less likely as evidence builds that the economy is not slowing as quickly as many had feared.

The central bank held rates at 4.5 per cent last month, as expected, after cutting them for the first time in two years in August to boost flagging consumer demand and business investment.

Many analysts had expected the quarter-point August reduction would be the start of a series of cuts and that rates would fall to 4.25 per cent by November.

That forecast, however, is looking increasingly uncertain. Markets are now pricing in a less than 50 per cent chance of another rate cut this year compared with 70 two weeks ago.

"For the time being we expect that jitters over rising inflation and hopes of a consumer upswing will prevent base rates from falling again this year," said Philip Shaw, chief economist at Investec.

For starters, four of the BoE's nine-strong Monetary Policy Committee (MPC), including Governor Mervyn King, opposed the August move because they were worried about rising inflation.

And even the five wanting the cut appeared to be less than definitive in their view, arguing that the reduction could be easily reversed if it turned out to be unwarranted.

Mr King and the three other BoE officials who wanted to keep rates steady in August may have been right to be concerned that price pressures are picking up.

Data since that meeting showed inflation in July rose above the central bank's two per cent target for the first time since the current CPI measure was adopted in December 2003.

It rose further in August to 2.4 per cent thanks to soaring petrol prices.

With companies like British Gas announcing 14-per cent-plus rises in utility bills, inflation may pick up speed this month, suggesting the BoE might be reluctant to cut rates again.

"(We) would highlight the continuing strength of the labour market as well as the prospect of inflation running close to three per cent before the year-end as justification for inaction," said Simon Rubinsohn, chief economist at Gerrard.