Experts are predicting a drop in interest rates in August after the Bank of Engand yesterday kept rates at 3.75 per cent.

Rates were maintained at their 48-year low for the fourth consecutive month, as predicted by analysts, at the end of Sir Eddie Georges last meeting in charge of the Bank's nine-strong monetary policy committee.

Hilary Cook, Barclays Private Clients' director of investment strategy, said: "It wasn't surprising with the continued weak state of manufacturing in the UK, lower global interest rates and the tough state of the global economy. The weakness of sterling is doing the job of supporting manufacturing for now."

But business leaders warned the Bank had missed an opportunity by keeping rates on hold.

British Chambers of Commerce has joined calls from business groups for a cut in interest rates while output growth is weak and sales are under control.

Ian Brinkley, senior economist at the TUC, said: "UK manufacturers will be disappointed. With so much economic uncertainty across the world, a cut now would have given industry more confidence to invest."

Simon Rubinsohn, economist at stockbroker Gerrard, said: "Despite the failure of Sir Edward George to give a parting gift to manufacturers, money markets continue to believe that a further easing in policy is likely over the coming months.

"We would certainly not rule this out and have consistently argued that the most likely timing of another move is August."

Friday June 6, 2003