Interest rates held

The Bank of England today announced interest rates are to be kept on hold, confirming City expectations that the official cost of borrowing would not rise.

Chancellor Gordon Brown's ?5.7bn pre-budget statement yesterday, a package of carefully targeted tax cuts and spending increases, has not altered the bank's inflation outlook and forced a rate rise.

The bank's nine-member monetary policy committee voted to keep rates at 6%, making it nine months in succession that they have been left unchanged.

In his speech to the CBI annual conference in Birmingham on Tuesday, the bank governor, Sir Eddie George, had injected a note of caution, rejecting calls from industry for a signal that rates had peaked and warning that further rises were still possible.

Some economists have argued that with underlying inflation still comfortably below the government's target and pay pressures subdued, despite falling unemployment, the MPC are right not to act.

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