The Bank of England kept interest rates steady for a third month running today.
Analysts had predicted the BoE's Monetary Policy Committee would keep borrowing costs at 5.75 per cent. Policy makers have said they need time to see what effect recent market turmoil has on economic growth and inflation.
he BoE offered no statement to accompany its widely expected decision, but sterling rose and interest rate futures fell as there had been some nervousness the BoE could make a surprise cut.
A few months ago, many economists had predicted a further rate rise this year following five since August 2006. But this was before the global cash crisis, which prompted a run on British mortgage bank Northern Rock last month.
There are worries that this will soon spill over into tighter lending conditions on companies and consumers, slowing the economy as a result.
There are already signs that Britain's housing market is cooling. Mortgage lender Halifax said house prices fell 0.6 per cent last month, the first decline since December.
The BoE has said it will watch credit conditions closely and many economists believe rates have now peaked and could come down as soon as November.