Decision not to cut the cost of borrowing will disappoint housebuilding and property sectors

The Bank of England has held interest rates at 5% despite gloomy predictions for the British economy.

The House Builder's Federation had called for a 0.5% cut. It had hoped that a reduction in the cost of borrowing would to prevent the housing slump deteriorating further and impacting on the wider economy.

Many analysts had predicted the bank's "no change" decision because of the need to control inflation at a time of rising fuel and food costs.

However most experts believe rates could come down a quarter of a per cent in June.

Responding to the decision, Mike Ratcliffe, chief executive of Wolsey Securities, said: “While the decision by the MPC not to cut interest rates is disappointing, it is no longer the most significant factor in preventing the economy from weakening further.

"The housing market is currently the key factor in deciding our future in this respect and we must all wait to see the Government’s next move."