THE team of senior economists with the task of setting interest rates faced a familiar story yesterday - a booming housing market versus depressed manufacturing figures.

The Monetary Policy Committee will today bring to an end feverish speculation about whether it will raise rates for the first time in nearly four years.

An increase was looking certain, with a raft of data showing consumer borrowing showing no sign of abating.

That was backed yesterday by Britain's biggest mortgage lender, the Halifax, reporting the average cost of a property rose by a robust 1.2 per cent during last month to £137,780, with prices now 16.7 per cent higher than they were 12 months ago.

But the manufacturing sector is on the spotlight again after the Office for National Statistics said production was 0.2 per cent lower than August - a performance which took City analysts by surprise.

Experts had been expecting a rise of 0.3 per cent as the battered industrial sector benefitted from signs of a recovery in UK economic confidence.

Raising interest rates to try to stem the housing market may damage manufacturing further.

Martin Ellis, Halifax chief economist, suggested that a small rates rise would do little to slow home buyers and equity releases.

He said: "A 0.25 per cent rise in interest rates will add around £4 per week to a typical £80,000 mortgage - a figure which can easily be absorbed by the vast majority of UK households."