BoE holds rates at 4.75 percent

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Caught off guard by August's quarter percentage point move, markets had been on heightened alert for another surprise, although only one of 52 economists polled by Reuters had predicted the BoE would move this month.

The Monetary Policy Committee, which is back up to its full nine member strength for the first time since March, offered no statement to accompany its decision.

But with inflation half a point above the BoE's 2.0 percent target and set to rise further, the Monetary Policy Committee is expected to lift borrowing costs to 5.0 percent next month, when it prepares its new quarterly forecasts.

Fears of the U.S. housing market turning down and domestic growth slowing, however, have got some analysts wondering whether the BoE will hike at all this year.

MPC member David Blanchflower seems more minded to cut interest rates then raise them. But BoE Deputy Governor John Gieve has said that he even considered an increase last month when the MPC unanimously held rates steady.

Figures this week have also been strong. House prices jumped strongly in September, and both services and manufacturing growth accelerated, according to surveys.

Against that, second quarter economic growth was revised down to around its long term trend rate and price pressures were not as strong as the statistics office had initially reported.

Official data has also showed the service sector which makes up three quarters of the national total contracted by 0.3 percent in July, suggesting weaker overall growth in the third quarter.

Inflation is expected to rise further in the coming months on the back of higher university fees and utility bills, but the recent collapse in gas prices bodes well for it coming down next year.