Mr Bailey told MPs it was a finely balanced decision not to increase rates earlier this month but that he was ready to take action in December if necessary. He said he was keeping a close eye on the data ahead of the next meeting of his top team as he gave a hint a hike is coming.

       "I'm very uneasy about the inflation situation," he told the Treasury Committee.

       "It is not of course where we want it to be, to have inflation above target."

       According to the latest ONS figures, inflation currently stands at 4.5 percent, more than double the two percent target set by the Treasury.

       The rise has largely been caused by an increase in energy prices, with fears the rate is currently on target to reach as high as five percent by spring next year.

       "It was a very close call in my view," Mr Bailey added about the decision not to increase rates when the Monetary Policy Committee (MPC), which sets interest rates, met on November 4.

       The MPC meets every six weeks to vote on whether to change interest rates.

       Earlier this month the group shocked the market when it voted to keep rates at a record low of 0.1 percent.

       Just two of the nine committee members backed a rise in rates to 0.25 percent.

       Mr Bailey said a lack of official data about what had happened to around one million workers who were still on furlough when the Government's jobs protection programme ended on September 30 had made him want to wait rather than raise rates this month.

       "For me the question was, do we wait six weeks, until the next meeting.

       "Bearing in mind we'll start to see the picture by then," he said.

       "You can make the argument for doing it now, it is a very closely balanced argument.

       "I felt that on balance for me there was something to be said for waiting to see this evidence on the labour market from the official data which we will start to get tomorrow, interestingly."

       While the MPC voted earlier this month to freeze interest rates, Mr Bailey said at the time that "it will be necessary over coming months to increase Bank Rate in order to return CPI (Consumer Prices Index) inflation sustainably to the two percent target".

       More to follow...