THE decision by the Bank of England's Monetary Policy Committee (MPC) to leave interest rates on hold at 4.5 per cent postpones an inevitable rise, according to the Kent branch of the Institute of Directors (IoD).

Alyson Howard, chairman of the Kent IoD, said the decision was as expected.

She said: “The MPC wants to assess the impact of recent rate rises for a little longer, before it moves again. But let there be no doubt, it will move again.

“We expect a further quarter point rise next month, with the Bank of England then holding back whilst it assesses the full impact of the tightening in policy over the past year.”

However, the IoD is optimistic rates wil settle at a controllable level.

She added: “We are beginning to see evidence that the housing market is slowing at long last. More immediately, however, the Bank will also need to be re-assured that the surge in housing wealth won’t translate into a fall in the savings ratio.

“Thankfully the relationship between housing wealth and household spending does appear to be weaker now than in the late 1980s. The IoD is more optimistic than the City. We forecast that interest rates may only need to rise to five per cent.”