MPC vote to hold rates was unanimous

All nine members of the Bank of England's interest rate-setting committee voted to keep the cost of borrowing on hold this month, minutes from the meeting showed today.

The Bank's monetary policy committee (MPC) was unanimously persuaded by the "surprisingly strong" level of consumer spending and buoyant housing market to leave rates unchanged at 3.5%.

Committee members, headed by the Bank's new governor Mervyn King, decided at their meeting on August 6 and 7 that a change was "not warranted", especially after the previous month's cut of 0.25% which brought rates down to a 48-year low. The Bank of England has cut rates by 2.5% in total since early 2001, in an effort to prop up the economy, which has slowed down following a period of strong growth in the late 1990s fuelled by the internet and technology boom.

Since then, US economic data boosted confidence for a global recovery, although growth in the UK has been weaker than expected, despite strong consumption, the MPC said.

The Bank's own forecasts for inflation and gross domestic product, published last week in the quarterly inflation report, have been revised downwards, suggesting that it is content to watch for developments before making a fresh change to the cost of borrowing. Economists are predicting that interest rates will change next year, but opinion is divided on whether they will go up or down.

Commenting on the meeting minutes, John Butler at HSBC said: "The key point is that we should not read this as a central bank that is prepared to keep rates unchanged for a long period of time."