Bank keepsinterestrates low

Policymakers also resisted calls to pump more cash into the economy as fears grow over the impact of the Government’s forthcoming spending cuts.

But the decision is thought to disguise a three-way split emerging within the Bank’s nine-strong Monetary Policy Committee (MPC) as rate-setters are torn between moves to tackle high inflation and support the economy.

Yesterday’s news of a shock 3.6 per cent slump in property prices during September added to recovery concerns. The Halifax figures showed the worst monthly drop since the group began compiling figures in 1983.

Calls have been growing for the MPC to launch another phase of quantitative easing (QE) to support growth.

The Bank has not changed rates for 19 months in a row, while it last increased QE last November, when it upped the programme by 25bn to 200bn.

The Institute of Directors (IoD) and British Chambers of Commerce are calling for a 50bn extension of QE before the end of the year.

Worries are growing that the private sector is not strong enough to lead the recovery once the Government cuts kick in.