The Bank's decision to hold rates at 5 per cent for the fifth month in a row comes as little surprise. Despite forecasts that the country is set to enter recession, there is little that the nine-member Monetary Policy Committee (MPC) can do until it is sure that inflation is starting to fall. But what the markets are waiting for now is a peek at the minutes of the meeting, due to be published on September 17. This will give some indication of how seriously the committee debated a rate cut and may give an indication of when rates may fall. Some analysts predict it will be as soon as November, while others believe that the Bank will not be free to act until early next year.

Whenever the next rate cut is, homeowners are unlikely to benefit unless the funding crisis in the mortgage market has been cured. While the interbank lending rates, which determine the price of mortgage lending, usually move in line with the base rate, they have been inflated by the lack of mortgage funding available. In addition, even if the interbank rates do fall, it is questionable whether all lenders, keen to boost their profits after a disastrous year, will choose to pass on the full cut in borrowing costs to borrowers

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