Bank keeps interest rates unchanged at 6%

The Bank of England today announced it was leaving interest rates on hold at 6%.

It is the eighth month in succession that the bank's nine-member monetary policy committee (MPC) has left the official cost of borrowing unchanged.

With latest figures showing underlying inflation at just 1.9% - well below the government's 2.5% target - industry and unions have argued that there would be no justification for a rate rise.

They fear an increase would drive the pound even higher against the euro, adding to the difficulties of exporters struggling to compete aboard.

But the "hawks" on the MPC remain concerned about inflationary pressures in the economy.

There are also worries about the impact of rising oil prices. The August inflation figures were so low because of a fall in petrol prices - which have since risen again.

One union leader has argued that the MPC should be talking about cutting interest rates rather than raising them. Roger Lyons, general secretary of the Manufacturing, Finance and Science union, warned that 30,000 jobs could be lost unless the cost of borrowing started to come down.