Interest rates kept on hold at 6%

The Bank of England today kept interest rates on hold at 6% for the 11th consecutive month, despite strong pressure from industry and unions for a cut.

City analysts had predicted the "no change" decision from the Bank's nine-member monetary policy committee which was announced following their monthly meeting.

However, pressure for a reduction in the cost of borrowing had intensified since last week's surprise rate cut by the US federal reserve to counter the weakening of the American economy.

The Confederation of British Industry and the British Chambers of Commerce had urged the Bank of England to follow suit in order to protect the UK from a global economic downturn.

Two MPC members, DeAnne Julius and Sushil Wadhwani, had called for a "pre-emptive" quarter-point rate cut at the last meeting in December, citing the slowdown in the world economy.

But the hawks on the committee fear that continuing falls in the level of unemployment will lead to calls for higher wages, which would in turn fuel inflation.

While City experts expected that the Bank would retain its "wait and see" stance for another month, most expect that it will cut rates before the spring.

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