Despite yesterday's hold on interest rates by the Bank of England (BoE), there is still room for one more quarter point rise in this economic cycle, the Institute of Directors (IoD) has said.

Graeme Leach, chief economist at the IoD, said: "The Monetary Policy Committee has gone into hibernation for a couple of months, but it's very likely to wake up with a growl in the New Year.

"The IoD forecasts that interest rates will peak after one more quarter point rise.

"There is now clear evidence the UK economy is slowing in response to the increases in interest rates over the past year, but we agree with Mervyn King that this is no time for hubris or complacency over inflation.

"The labour market remains tight, oil prices are high and money supply growth remains strong."

David Bitner, head of product operations for Bradford & Bingley, said that with recent data indicating a peak in this interest rate cycle, keeping the base rate at 4.75 per cent was the "expected decision".

"With very low inflation and low numbers of mortgages arranged, both trends that look set to continue, this is a real possibility," he added.

"The latest inflation data shows that the CPI measure posted a monthly gain of just 0.1 per cent against some expectations that it would reach 0.4 per cent.

"This has resulted in the year-on-year rate of increase slipping to just 1.1 per cent, its lowest level since March this year."

Source : ukloannews.co.uk