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Last Updated: Wednesday, 19 September 2007, 09:29 GMT 10:29 UK
Bank voted 9-0 to hold UK rates
Bank of England building
The Bank believes inflation risks have "receded"
Policymakers at the Bank of England voted unanimously to hold UK interest rates at 5.75% at their September meeting, minutes from the meeting show.

The Bank's rate-setting Monetary Policy Committee (MPC) said it had considered the disruption in financial markets in its decision.

The minutes showed that the Bank's view on inflationary pressures was that they have "receded".

On Tuesday, figures showed UK inflation fell slightly to 1.8% in August.

Uncertain future

The minutes showed that all nine members of the MPC voted to keep rates unchanged, with the committee saying it was too soon to tell how the turmoil in the financial markets would affect the wider economy.

We believe that the MPC may have to go further and... a small cut in interest rates may be needed in the not too distant future
David Kern, Economic adviser to the British Chambers of Commerce

The minutes of the meeting come a day after the US Federal Reserve slashed its key interest rate by a dramatic half a percent from 5.25% to 4.75%.

The Fed was seeking to soothe fears that the US home loans-centred credit crisis would plunge the US into a recession. The move helped to underpin shares worldwide and prompted speculation that the Bank of England could follow the Fed's lead.

Doveish comments on inflation combined with the uncertain credit outlook have prompted analysts to predict that UK interest rates have peaked.

"We would certainly expect rates to come down by early next year and quite possibly by the end of this year," said Philip Shaw, chief economist at Investec.

Business groups also interpreted the Bank's minutes as indicating that no more rate rises were on the cards.

"We welcome today's MPC minutes which effectively signal that higher UK interest rates are now off of the agenda," said David Kern, economic adviser to the British Chambers of Commerce.

"We believe that the MPC may have to go further and acknowledge that, given the growing risks facing businesses, a small cut in interest rates may be needed in the not too distant future.



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