Bank of England: Interest rates remain on hold

Interest rates are to remain on hold for at least another month, the Bank of England has said.

Following a two day meeting of the monetary policy committee (MPC), it was announced that rates are to remain at 4.75 per cent.

The most recent change in interest rates was an increase of 0.25 percentage points to 4.75 per cent on 5 August, 2004.

While most City experts had expected the Bank to adopt a steady-as-she-goes approach, close attention was being paid after last month's split decision where one MPC member voted for a quarter point rise.

Responding to the news, Graeme Leach of the Institute of Directors said if the MPC wanted to avoid rate rises during the election campaign, the next opportunity for a change would be June.

"Three factors suggest further tightening is on the way," he added.

"First, evidence that the UK economy is operating at or above potential capacity - there is a zero or positive output gap.

"Second, average earnings growth is edging upwards, as the labour market tightens.

"Finally, broad money supply growth has been strong and is not consistent with a two per cent inflation target."

TUC chief economist Ian Brinkley said that manufacturers would be relieved at the decision.