The cost of borrowing is expected to remain at its current 48-year low when the Bank of England's interest rate setting Monetary Policy Committee meets this week.

City commentators are united in the view that the Bank, which last cut interest rates in July, will announce no change from the current level of 3.5 per cent in Thursday's monthly announcement.

After seeing rates cut nine times since the start of 2001, economists believe the next move could be upwards - but not yet.

Minutes of the commitee's last meeting, in which its nine members voted unanimously to keep rates on hold with a "surprisingly strong" level of consumer spending and buoyant housing market, reinforced that view.

Recent US economic data has boosted hopes for a pick-up in the global economy and while UK growth has been weaker than many expected, despite strong consumption, the committee appears content to watch for developments before making a fresh change.

The Bank of England's quarterly inflation report, published just over two weeks ago, paints a picture of "moderate growth" in consumer spending, accompanied by strong growth in public expenditure and a modest increase in business investment.

Philip Shaw, from Investec, said: "We expect the committee to leave rates on hold in September, and indeed for best part of the next year, envisaging a rise only in the third quarter of 2004."

He said there were risks to the economy, such as slowing household spending, but the committee was likely to be reluctant to cut rates further.

Monday September 1, 2003