THE Bank of England's rate setting committee looks certain to raise interest rates to four per cent today following more positive economic data.

Experts have speculated during the past few weeks that a quarter per cent rise was likely.

Ed Balls, the Treasury's chief economic advisor, said a rise would help "lock in" economic stability.

Mr Balls indicated that a pre-emptive approach to monetary policy was needed to assist stability, as the UK's economic recovery took hold.

The monetary policy committee began its deliberations yesterday against a backdrop of consistent consumer spending and a resurgence in the manufacturing sector.

Analysts were saying a rise was all but confirmed by further figures, which showed the service industry grew for a tenth consecutive month in January.

The service sector Purchasing Managers Index (PMI) from the Chartered Institute of Purchasing and Supply (CIPS) stood at 59.8 against 58.5 last month - above 50 indicates growth.

Activity levels in the sector during the month increased at their sharpest rate since June 1997, the CIPS said.

House prices rose by a strong 2.2 per cent last month as a shortage of homes for sale continued to push prices up, according to Britain's biggest mortgage lender Halifax.

It said the increase, which followed a gain of two per cent in December, reflected the continuing strength of the property market.

At the same time the average price paid by a first-time buyer broke the £100,000 barrier for the first time, after the price paid by people taking their first step on the property ladder soared by 22.6 per cent during the past year.