August 2, 2002	Friday	Jamadi-ul-Awwal 22,1423

LONDON, Aug 1: The Bank of England on Thursday left its main lending rate unchanged at a 38-year low of 4.0 per cent for the ninth month in a row amid concern about the risks posed to the economy by the recent slump in stock prices.

The central bank gave no explanation for its decision, but it came as no surprise to economists who say British interest rates may be left on hold for the rest of the year after recent stock market turmoil.

Many Britons have seen the value of their stock market investments tumble and the worry now is that consumer spending, the main pillar that kept the British economy out of recession during the recent downturn, may give way.

As recently as a few months ago, the British central bank’s nine-member Monetary Policy Committee (MPC) had been tipped to raise rates as soon as this month or even earlier to try to cool a rampant housing market.

Earlier Thursday the Nationwide building society said British house price inflation had risen to 21 per cent in July its highest level in 13 years.

And though figures showed last week that the British economy had notched up quarterly growth of 0.9 per cent in the three months to June the fastest rate for two and a half years analysts warned that equity turmoil could derail the recovery.

Moreover, the underlying annual inflation rate fell in June to just 1.5 per cent its lowest level since records began in 1975 and well below the official target of 2.5 per cent.

And there are signs that the rampant boom on the British high-street is running out of steam after retail sales suffered their second quarterly fall in a row in June.

Sterling showed little reaction to the Bank of England’s announcement, holding steady at 1.5937 euros and $1.5527.

The FTSE 100 index of leading shares, which has fallen 20 per cent since the start of the year, and 10 per cent in the last month alone, stood 1.0 per cent down on the day at 4,202.7 points, barely changed from shortly before news of the decision.—AFP