The Bank of England held interest rates at 5% today for the fourth straight month, and borrowing costs are expected to remain on hold for a while as policymakers balance slowing growth and rising inflation.

The Bank of England held interest rates at 5% today for the fourth straight month, and borrowing costs are expected to remain on hold for a while as policymakers balance slowing growth and rising inflation.

Most experts had predicted the Bank's Monetary Policy Committee would keep the rate unchanged and the expectation is for rates to be steady for the rest of the year, followed by cuts next year.

Financial markets showed little reaction. The FTSE-100 index of leading shares has already fallen 800 points since mid-May and the pound has shed 6 cents against the dollar in the past month as the economic outlook worsens.

Fears are growing that Britain could soon enter recession for the first time since the early 1990s when hundreds of thousands of people lost their jobs and homes.

House prices are sliding even faster than they were then. Data from the Halifax, Britain's biggest mortgage lender, today showed UK house prices down a record 10.9% in July compared to the same period last year.

The property downturn is battering consumer confidence and taking its toll on the wider economy as homebuilders cut thousands of jobs and household goods sales dive.

Inflation in Britain is running at nearly twice the Bank's and could soon hit 5% as utility companies have raised their tariffs by up to 30 percent.