The Bank of England’s monetary policy committee voted unanimously to keep the key interest rate at 0.5% at their latest meeting, despite rumours of a possible rate hike.

The FTSE 100 sunk in anticipation of the news, before picking up slightly in the wake of the announcement. Whilst all members of the committee voted to keep rates at the current level this month, they did say a rate rise could be on the cards sooner than previously expected.

The minutes said rates were likely to rise “earlier” and by a “somewhat greater extent” than they thought at their last review in November. There is speculation that the next rate rise could come as soon as May.

Michael Metcalfe, global head of macro strategy at State Street Global Markets, commented: “Markets had moved quickly this year to discount more tightening from the BoE. The hawkish tilt of this meeting will at the very least, vindicate these moves and possibly encourage further expectations. What will be key now is to watch how sterling responds, as a much quicker appreciation could produce a faster fall in inflation and potentially nullify the need for a more rapid tightening cycle.”