One of the most surprising things about the increase in interest rates announced by the Bank of England's monetary policy committee (MPC) on August 3 was how much it surprised so many analysts.

In a poll of 46 City analysts conducted ahead of the meeting of the MPC, only eight predicted an increase.

However, you don't need to look too far to see why the MPC acted as it did.

The rate of price inflation in June was 2.5 per cent, the highest for a decade, and it is expected to remain for some time above the two per cent target set by the Chancellor Gordon Brown.

The role of the MPC is to achieve the two per cent target, which meant it was more likely to act than not.

The increase in interest rates from 4.5 per cent to 4.75 per cent was the first movement in any direction since the rate was cut by a quarter of a point exactly a year ago.

The problem, however, is that there are any number of other warning signs in the economy that could have justified the MPC keeping the rate at 4.5 per cent, including the record number of people in the second quarter of this year who were unable to meet debt repayments.

A total of 26,000 people were declared insolvent, an increase of 66 per cent on the same period last year.

The total level of debt in the economy, now standing at £1 trillion, means the problems of debt repayment are likely to increase, particularly with the increase in interest rates.

The increase could also adversely affect manufacturing industry, with higher borrowing costs and increased difficulties in export markets with the pound likely to increase in value.

Despite these other warning signs, the MPC has a clear objective, which is to keep inflation at two per cent.

The problem, many of us have argued from the outset, is the overriding importance given to this objective.

The end result is the increase announced two weeks ago. I'm only surprised it surprised so many.