MercoPress. South Atlantic News Agency

Bank of England keeps rates on hold at 4%

The Bank of England decided to keep United Kingdom interest rates on hold at 4%. Last February in an attempt to cool consumer spending and the housing market the bank's Monetary Policy Committee voted to increase rates to 4% from 3,75%.

Reacting to the MPC decision to leave rates unchanged David Frost Director General of the British Chamber of Commerce said it was "the best decision for business".

"After last month's quarter point increase we should wait and see if consumer debt and house prices stabilize before raising rates further".

The Confederation of British Industry said that a second successive rise in interest rates would have undermined business confidence.

"This decision thankfully recognises the need for a steady hand especially at a time when the pound's strength against the US dollar is beginning to worry exporters", highlighted CBI chief economist Ian McCafferty.

However most London City economists expect the cost of borrowing to increase to 4,5% by the end of the year.

Revised official data showed that the UK economy expanded 2,3% in 2003, the strongest in three years, with pound sterling reaching 1,85/1,90 US dollars.

But it's only natural that the Bank of England will be keen to stop overheating of the economy and "consumers and business should be full aware that further rises in interest rates are just around the corner", said Graeme Leach from the Institute of Directors.