Bank of England Base Rate held at 5.5%

The Bank of England mildly surprised market watchers, Thursday, by opting to keep interest rates on hold at 5.50%.

The surprise decision came against a backdrop of sentiment that had increasingly been swinging behind a base rate cut in recent days following confirmation of weak Christmas trading numbers from many of the nation's High Street retailers as consumers reined in spending.

But the decision will have been a tough one for the Bank to call, given policymakers had to balance out the impact of a slowdown in consumer spending against signs of inflationary pressures building up in the economy - prompted in part by higher commodities prices in general and the prospect of increased residential energy prices in particular.

The British Chambers of Commerce was swift to react, arguing a rate cut would have helped alleviate threats to the banking system and help restore the smooth flow of credit in the economy.

So it's eyes down for the February meeting of the Bank's rate setting committee. By foregoing a rate cut now the bank has probably raised the likelihood of a rate cut next month. Borrowers can but hope.