April 19 (Bloomberg) -- The Bank of England's policy-making committee voted 7-1 to keep the benchmark interest rate unchanged this month, with Stephen Nickell again the only champion of a reduction.

Nickell voted for a fifth month to lower the rate by a quarter-point and the other seven members favored leaving it at 4.5 percent for an eighth month, according to the minutes of the April 5-6 meeting released by the bank in London today. The early departure of Richard Lambert reduced the size of the committee by one this month.

Investors abandoned bets on a rate reduction as no policy makers have joined Nickell since December, economic growth picked up and inflation accelerated. The central bank expects Europe's second-biggest economy to expand at least 2.7 percent this year as inflation remains close to its 2 percent target.

``For most committee members the data suggested that recent output growth had continued to grow at or around trend, although for some there remained a downside risk to the near-term outlook,'' the minutes said. ``Inflation was likely to remain close to target with some upside risks in the near-term related to recent increases in energy prices.''

The pound rose against the dollar to $1.7884 as of 3:14 p.m. from $1.7838 before the minutes were released. The implied rate on the interest-rate futures contract maturing in December was unchanged at 4.8 percent. It's up 33 basis points this year.

A basis point is 0.01 percentage point. The contract settles to the three-month London inter-bank offered rate for the pound, which has averaged about 15 basis points more than the central bank's benchmark for the past decade.

Faster Growth

All but one of 20 economists surveyed by Bloomberg News last week accurately predicted the 7-1 vote.

``It looks like rates are going to remain at 4.5 percent probably throughout this year and possibly throughout 2007,'' Ross Walker, an economist at Royal Bank of Scotland Plc in London, said in an interview.

``It seemed that both GDP growth and consumption had grown around trend in the past couple of quarters,'' the minutes said. The bank's definition of trend growth, or the rate at which the economy can expand without sparking inflation, is 2.5 percent.

The rate of expansion quickened to 0.6 percent in the fourth quarter, the fastest pace in a year, powered by increasing consumer spending, services output and a rebound in the $6 trillion housing market.

Consumer Spending

The bank's forecast for a pickup in growth to at least 2.7 percent this year from 1.8 percent in 2005 depends on continued strength in consumer spending. Still, spending has faltered since January and some economists predict retail sales will contract this quarter for the first time in a year.

One committee member, most likely Nickell, said an increase in unemployment suggested ``a degree of spare capacity in the economy,'' according to the minutes. This, along with higher taxes and energy costs meant consumption was ``unlikely to pick up.''

An unspecified number of policy makers agreed with this view, while for others ``it was difficult to draw strong conclusions about the current margin of spare capacity.''

Accelerating inflation may have deterred some of them from joining Nickell in backing lower rates this month. His term on the committee ends after the bank's May meeting, leaving him with only one month to win four more votes to pass a rate reduction.

Energy Prices

Inflation reached 2 percent in February and Bank of England Governor Mervyn King said March 28 he expects higher energy prices to boost the rate above target in coming months.

Crude oil for May delivery reached a record of $71.60 a barrel on the New York Mercantile Exchange yesterday. Gas prices rose to a record 255 pence a therm on March 13, broker Spectron Group Plc said.

Chancellor of the Exchequer Gordon Brown today reaffirmed the bank's monetary policy remit to aim to keep inflation at 2 percent in a letter to the governor dated March 22.

Policy makers reiterated they would be vigilant about the possibility of inflation feeding into prices and wages, although these appeared to be showing no signs of increasing on a year earlier.

The committee would continue to ``carefully'' monitor inflation expectations as they had risen in recent central bank surveys, according to the minutes. A survey of expectations of inflation published yesterday showed people expected the rate to accelerate to 2.7 percent in the next 12 months from 2.2 percent in November.

Asset Prices

Policy makers also said increasing asset prices, including property values, ``were likely to be supportive for U.K. demand growth going forward.'' U.K. house prices gained for the eighth month in 10 in March, top mortgage lender HBOS Plc said April 6.

The bank reintroduced the concept of a ``re-balancing'' of the economy away from domestic consumption towards exports. Recent data suggested this could have started, helped by higher energy prices eroding disposable income and a weaker pound boosting trade, the minutes said.

A report from the Bank of England's regional agents today also said exports picked up in March and contacts expect them to improve over the next six months.

To contact the reporter on this story: Laura Humble in London at lhumble@bloomberg.net

Last Updated: April 19, 2006 10:19 EDT