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Homeowners greeted the Bank of England’s decision to hold interest rates at 5.75% with a sign of relief. The rate has been left unchanged since going up in July.

The Monetary Policy Committee (MPC), however, issued a statement with its decision – only the second time this has happened since the Bank gained independent decision-making from the government.)

Whilst acknowledging that pay pressure was ‘muted’ and that there were ‘tentative signs of a slowing in consumer spending’ the statement added: “The recent solid pace of output growth has been sustained and the margin of spare capacity appears limited. Indicators of pricing pressure remain somewhat elevated.”

The MPC statement came a day after the Bank agreed to inject emergency funds into the money markets if borrowing conditions between banks did not improve.

The MPC statement also said that the disruption caused by the credit crunch following the sub-prime mortgages crisis in the US had been discussed. It re-stated its mandate to meet the government’s inflation target of 2%, and not to rescue the markets.

“So the committee discussed these developments and other economic data in terms of their implications for the outlook for inflation,” the statement said. “The committee judged that no change in Bank rate was necessary at this meeting to keep inflation on track to meet the target in the medium term.”

The bank said it was too soon to tell whether the problems on the financial markets would have an impact on the wider economy.

In the Eurozone the European Central Bank also left interest rates unchanged, at 4%. This was a bit of a U-turn after ECB president Jean-Claude Trichet had recently suggested that rates would rise to 4.25% to control of inflation. Following the uncertainty on financial markets, the rate has been left as it was.

The Federal Reserve in the US is under pressure to cut interest rates as fears remain that the current level of interest rates will cause an economic slowdown in the US.