Most leading City economists are now predicting that the Bank's monetary policy committee - whose main brief is to keep control of inflation - will wait until next year before instituting a further cut to the cost of borrowing.

Howard Archer, chief UK economist at Global Insight, said the decision was "completely expected in the end, despite significant speculation only a few weeks ago that interest rates could be cut in November".

"The outlook for interest rates is currently highly uncertain, so the minutes of the meeting and the November Quarterly Inflation Report will be scrutinized particularly closely, not only for the Bank's latest views on how growth and inflation will develop over 2006 and 2007, but how it balances the risks to the forecasts," he said.

"We remain in the 'next move in interest rates is down' camp. We expect further below trend growth, modestly rising unemployment and intense competition through the supply chain to limit any secondary effects from high oil prices (which have come well off their highs) and to increasingly contribute to an unwinding of underlying inflationary pressures.

"Specifically, we expect a 25 basis point cut to 4.25% to occur in February, although we now believe that this is likely to mark the trough in interest rates."

Last month, the nine-member committee voted unanimously to keep interest rates on hold, after a split decision the previous month.

Also in response to today's freeze, Chris Iggo, UK senior strategist at AXA Investment Managers, said: "There is little to move the MPC at the moment. There have been some signs of recovery in the housing market which may help consumer sentiment.

"Inflation is above the target rate. Monetary indicators suggest plenty of liquidity in the UK economy.

"Meanwhile, global growth is strong and UK exports have benefited. We see the repo rate remaining on hold for some time, with Europe and the US providing more excitement on the interest rate front."

And with inflation breaching the Government's 2 per cent target, some experts are speculating that the next interest rate move will actually be upwards, with the Bank being forced to move to stem the economy's growth.

Earlier this month official figures showed that growth was running at 2.5 per cent in September - its highest level for eight years - due in part to the high price of oil and other commodities.

Mervyn King, the Bank's Governor, has also stated that there are signs that inflation will continue to move ahead in the same way and suggested that it is not the bank's role to intervene to boost retailers or provide a filip for nervous homeowners.

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