Interest rates likely to stay on hold

The Bank of England is today expected to keep interest rates on hold at 4% for the ninth month in a row.

Although rates have been held at their 38-year low since November, the stock market turmoil and low inflation has meant experts are all but ruling out a rate rise in the near future.

Until the market's slump over the past month, observers were predicting that the Bank would move to raise rates to slow the booming housing market and retail sales. However, mortgage lending is now showing signs of slowing while high street sales have shown two months of decline, indicating that the spending boom is over. A number of economists are now forecasting that the next rise in interest rates will not happen until next year - giving a further reprieve to homeowners.

Although City economists are generally agreed in their belief that rates will stay on hold when the Bank announces its decision at midday, some admit there is a small possibility of a cut.

Roger Lyons, general secretary of Amicus, has called for a cut of at least 0.5%.

"(Sir) Eddie George should cut interest rates in order to stave off thousands of job cuts in manufacturing. Everyone else is coming round to our way of thinking - so should he," he said.