The Bank of England has signalled it will not be changing interest rates in the near future.

The move will dismiss fears of an abrupt halt in economic growth, but the Bank did accept that a slower economy meant inflationary pressures had fallen.

With inflation having risen unexpectedly sharply since November and consumer spending growth weakening, the Monetary Policy Committee faced a difficult challenge in presenting a clear picture of the longer-term economic outlook.

The Bank said it thought high oil prices and sharp rises in water and sewerage charges would push inflation above the two per cent target soon, but these effects were temporary and would disappear from the inflation figures in 2006.