Bank in no doubt over rate freeze

There was no doubt among members of the Bank of England's Monetary Policy Committee (MPC) that the base rate of interest should be frozen in September.

Minutes from the meeting show that all nine members voted in favour of holding the rate at its current six-year high level of 5.75 per cent.

It was the second consecutive month that the rate was held and was good news for mortgage borrowers, who had endured five increases since August 2006.

Developments since the decision was made make another rate rise this year seem unlikely and some analysts even believe that a drop is on the cards.

The crisis at Northern Rock and the fact that inflation now sits at 1.8 per cent both act as downward pressures.

However, Howard Archer, economist at Global Insight, said that he sees the Bank adopting a 'wait and see' approach for now.

"We expect the Bank of England to remain firmly in 'wait and see' mode for the time being," he said.

"The bank will closely monitor how the credit crunch and Northern Rock crisis is impacting on the real economy and affecting the outlook for growth and inflation," added Mr Archer.

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