While all on the MPC agreed that slack in the labor market is now largely used up, the hawks saw a risk of stronger-than-expected wage gains and argued that a move now would reduce the risk of having to be more aggressive later. The vote split at the Bank of England was 6-3 vs. 7-2 in May, with 6 members voting to keep rates steady and 3 voting to hike.
If it does raise rates in August it will be only the second time in nearly a decade, after cutting rates to nearly nothing in the wake of the financial crisis.
Similarly, if Mr Carney hints at any interest rate hike at all in 2018, let alone August, then Sterling could also rise in value.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "Markets think there will probably be a rate rise by the end of the year, though expectations have been reined back significantly, and there is now a good chance rates will stay on hold".
"So, while it's not out of the question that the MPC raises Bank Rate in August, we continue to expect the committee to wait until next year". Household spending and sentiment had bounced back strongly, and a sharp fall in factory output in April could reflect firms running down excess inventory which built up in the period of bad weather in the first quarter, the BoE said. All in all, Haldane's change of stance and the BoE's upbeat statement suggest a higher likelihood of a future rate hike.
But Samuel Tombs, at Pantheon Macroeconomics, said he remained unconvinced that growth will rebound enough to warrant an August increase, with Bank Governor Mark Carney already branded the "unreliable boyfriend" for repeatedly guiding for hikes that do not come to pass.
At the end of a year ago Britain was the slowest-growing economy among the G7 group of rich nations, as businesses held back from investing ahead of Brexit and high inflation triggered by the 2016 referendum eroded households' disposable income.
CPI inflation was 2.4% in May, unchanged from April, but is expected to pick up by slightly more than projected in May in the near term, reflecting higher dollar oil prices and a weaker sterling exchange rate. Haldane has a reputation for wide-ranging interests and thinking that does not always represent the mainstream at the BoE, so it remains to be seen if other BoE officials follow his lead on monetary policy. As a result, the Bank of England may seek to curb inflation concerns, while at the same time avoiding the potentially negative impact of sustained rate rises on economic growth.
Earlier on Thursday, the Bank updated its guidance on unwinding its asset purchases.
The BoE said unwinding its balance sheet would take place over "a number of years at a gradual and predictable pace".