LONDON (AFP) - The Bank of England left interest rates unchanged for a third successive month, amid speculation borrowing costs may remain at 4.75 percent well into next year as the economy cools.
The decision, which had been widely expected by financial markets, follows signs that five interest rate rises here over the past year have taken some steam out of the British economy, in particular the housing market.
"The market's coming towards the concept that we may actually have seen a peak in interest rates," said Barclays Stockbrokers analyst Henk Potts.
"There's still a possibility that the next move could be down, although you're looking much deeper into 2005 for that prospect," he added.
The British economy braked sharply in the third quarter of 2004 when growth slowed to 0.4 percent, the weakest pace for over a year, according to preliminary estimates that some economists expect to be revised upwards.
Growth in gross domestic product slowed from a quarterly rate of 0.9 percent seen in the second quarter of the year, largely because of a 1.1-percent slump in industrial output.
The annual inflation rate meanwhile remains well below the 2.0 percent official target, slowing to a six-month low of 1.1 percent in September.
The decline took inflation close to the 1.0-percent level below which Bank of England governor Mervyn King must write to the Chancellor of the Exchequer Gordon Brown, explaining the decline.
11/04/2004 - 12:38 GMT - AFP