THE Bank of England needs to pause for breath before raising interest rates again amid tentative signs of a housing slowdown, according to The Times Monetary Policy Committee.

Rates should be left unchanged at 4.5 per cent for at least another month, The Times panel decided, with some members signalling that they would like to see borrowing costs on hold throughout the summer.

The seven-to-two vote from The Times panel will underline the belief in the City that the Bank’s MPC will also decide that the time is right for a pause in policy.

It is the first time in three months that The Times committee of experts has advocated a standstill in rates, with panel members keen to monitor the impact of recent increases in borrowing costs on the economy.

Sir Alan Budd, former chief economic adviser to the Treasury and founder member of the Bank’s MPC and now a member of The Times committee, said: “The (Bank’s) MPC needs to wait to see how its earlier rate increases are affecting the economy, both as far as demand growth and the housing market are concerned.”

The Times MPC agreed that base rates almost certainly would have to go up again, but there were divisions over how quickly borrowing costs should rise.

Martin Taylor, former chief executive of Barclays and chairman of the WH Smith pension trustees, said: “I expect the MPC to do nothing with rates until after the summer, and in their shoes would do nothing myself.”

Paul Myners, chairman of Marks & Spencer, was among the minority on The Times MPC pushing for an immediate increase in base rates. Voting for a quarter-point rise, he said: “I believe there to be a significant risk that inflation, which is currently benign, could reaccelerate unless economic growth moderates. Base rates should be raised to a more appropriate level sooner rather than later.”

Martin Weale, director of the National Institute for Economic and Social Research, said that rates ought to be returned to 5 per cent immediately. “An interest rate of below 5 per cent is an extra stimulus at a time when the economy does not need it,” he said.

“I do not actually expect the Bank to do this (put rates up to 5 per cent). They believe, for reasons which escape me, that interest rate errors should be corrected only slowly.”

Some members of The Times MPC — established in 2002 to provide an alternative voice on monetary policy — expressed concerns about the impact of any further sharp rises in government spending.

Mervyn King, the Bank Governor, has also recently emphasised that the Government must keep its budget deficit under control.

Sir Steve Robson, former Second Permanent Secretary at the Treasury, said: “Almost all the domestic indicators suggest that there needs to be some further policy tightening. But the focus now should be on fiscal more than monetary policy.”

The Times MPC also includes: Diane Coyle, director of Enlightenment Economics, Geoffrey Dicks, chief UK and euro economist at RBS Financial Markets, Anatole Kaletsky of The Times and Rupert Pennant-Rea, former Deputy Governor of the Bank of England.