Bank hints at another rate hold

The Bank of England has hinted that next month's monetary policy committee (MPC) meeting could see interest rates remain at 5.75 per cent.

This month, the MPC resisted calls for a cut to ease the liquidity crisis affecting financial markets, choosing to stick with the status quo in light of renewed concerns about inflation.

In a speech last night, the bank's deputy governor Rachel Lomax hinted that it was still too early to tell whether the recent financial turmoil would affect the wider British economy.

"The MPC's remit is to keep inflation at its two per cent target, so the key issue for us is how far the financial crisis will affect the wider economy," she noted.

If, Ms Lomax continued, the current liquidity squeeze evolved into a full blown credit crunch, resulting in a major tightening of lending to individuals and businesses, interest rates could come in to play.

Earlier this month, the US Federal Reserve cut its lending rate in a bid to rejuvenate the markets.

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