INTEREST rates were kept at 4.75 per cent yesterday amid signs that five rises during the past year had slowed rising house prices and consumer spending.

The latest no-change decision - the second in succession from the Bank of England's monetary policy committee (MPC) - followed speculation among economists that interest rates were close to their peak.

Most experts believe the MPC will not raise rates again this year, particularly as evidence mounts that house prices are stable and companies are feeling the pressure of oil prices remaining above $50 a barrel.

Factory output figures for August showed a 0.8 per cent fall and caused the City to scrap forecasts of above-trend growth in the third quarter. If that is correct, the bank will have more room to hit its long-term inflation target of two per cent.

A major encouragement for the MPC will be evidence of a recent cooling in house prices and consumer spending. A number of surveys have indicated inflation is easing.

The decision was welcomed by industry leaders who said it would have been reckless to raise rates in the current uncertain climate.

Derek Simpson, general secretary of private sector union Amicus, said the manufacturing sector needed the support of the MPC.