The Bank of England Monetary Policy Committee has decided to keep interest rates on hold at 4% for the third consecutive month. The move was widely predicted throughout industry and the city, with most observers now believing that interest rates have reached the bottom of their cycle.

Despite the lack of any change this month, interest rates are still at their lowest level since 1964, a fact which has spurred consumer spending onwards to record levels. The Halifax survey saw house prices rise in January at the fastest pace since 1989 and car sales rose 9.3 percent, according to industry reports published yesterday.

Still desperate to boost flagging exports, many manufacturers were disappointed with the decision, with unions having already warned this week that about 200,000 jobs could be lost by the end of the year unless action is taken to reduce the value of the pound. Stephen Radley, chief economist at the Engineering Employers' Federation (EEF) said: "This is a missed opportunity to boost business confidence and give short term support to a manufacturing sector which remains firmly depressed. With inflation so low and real interest rates relatively high, manufacturers will find it hard to understand the reluctance to countenance any further reductions interest rates."

Ian Fletcher, chief economist at the British Chambers of Commerce, said: "With so much conflicting data and views on the economy, it is understandable members of the MPC should wish to sit on their hands. UK manufacturing is suffering from very weak exports and, for its sake, the worst thing the MPC could do now is to make a policy mistake by jumping in one direction too soon. If demand starts to falter at home, we would seek further interest rate cuts in the months ahead, but at this stage it is too early to judge whether that is happening."