Steady as she goes

The Bank of England's widely expected decision to keep interest rates at 6 per cent for the eighth month running will be welcomed by homeowners. The move means mortgage lenders are unlikely to raise their rates and homeowners - many of whom are already mortgaged to the limit as a result of the past year's house price boom - can breath easy.

It's also good news for anyone with an overdraft or anyone planning to take out a personal loan. The decision means the Bank will continue to lend to commercial banks at 6 per cent, making it difficult to justify any increase in the cost of their loans and overdrafts.

In contrast, savers will be less enthusiastic as banks and building societies are unlikely to offer them a better rate.

Evidence has been coming in that some of the country's more popular stocks are seeing a rise in share price in the wake of the decision.

Exporters who are competing against European rivals will also welcome the move. The pound's strength against the euro makes British products more expensive.

The Bank gave no reason for its decision, but it probably reflects the widely held view that inflation is under control. The current inflation rate is 1.9 per cent, significantly below the government's target of 2.5 per cent. The impact of the fuel crisis and a slowdown in the housing market are also thought to have influenced the monetary policy committee - the group of nine economists who decide the rate.

Rates were increased four times between September 1999 and February as an attempt to slow economic growth and keep inflation under control.

Meanwhile, the European Central Bank shocked the city by announcing an interest rate rise from 4.5 per cent to 4.75 per cent.