The Bank of England has announced that interest rates are to remain unchanged at 3.75 per cent following last month's surprise reduction.

The February decision to drop rates by 0.25 per cent was the first change for 14 months.

Forum Response: Institute of Directors

Ruth Lea, Head of the Policy Unit, said: "This month's decision by the monetary policy committee to leave rates unchanged does not surprise us. But we expect further monetary easing later this year.

"There is no doubt that economic clouds are gathering; a possible war with Iraq is draining confidence and the markets are very jittery and bearish. Recent economic news has suggested that the world economy continues to deteriorate and this is especially difficult for the manufacturing sector, which has been in recession for nearly two years.

"Moreover consumer spending and the housing market, the parts of the economy that underpinned growth last year, do now seem to be moderating."

Forum Response: Business Services Association

Norman Rose, director general for BSA, told epolitix.com: "The MPC has taken a prudent decision to leave interest rates unchanged. The effects of the previous reduction are only now becoming clear and it would have been unwise to change again this month. Despite the slowing down of the service sector reported by CIPS today, business services remain in good shape. The current rate presents no barrier to investment or to winning new business."