The Bank of England has held interest rates steady at 4.0 per cent for the second month running, after a two-day meeting which had put markets on a knife-edge over whether rates would go up or not.
Analysts say the BoE is now highly likely to raise rates by a quarter-point to 4.25 per cent next month in order to cool soaring debt levels and booming house prices, though overall inflation remains well below the BoE's 2.0 per cent target.
Financial markets reacted strongly to the decision, with sterling off half a cent against the dollar at $1.8353 and UK interest rate futures up sharply.
The BoE made no statement to accompany its decision, even though the market had been almost evenly split between those who thought worries about booming consumer spending would push the BoE to move this month, and those who said that low inflation and weak manufacturing meant it could wait until May.
