The Bank of England has announced that interest rates are to remain unchanged at four per cent.

Whilst today's reprieve will be welcomed by homeowners, most City experts had expected a rise in the wake of an explosion in personal debt.

But some economic data had led others to suggest that today's announcement would be too close to call.

Inflation remains at just 1.3 per cent - significantly below the chancellor's upper target.

The consumer boom, however, continues to concern the bank, recent minutes have shown.

Mortgage lending increased to £25 billion in February - its largest amount in four months. Some £18 billion was put on credit cards, taken out in loans and run up on overdrafts.

But recent data pointing to sluggish manufacturing performance had led to calls for the bank to hold off on any rate rise.

David Frost, director general of the British Chambers of Commerce, said: "Today's decision by the MPC is the preferred option for business. If growth forecasts are borne out, 2004 will be the UK's first year of above-trend growth since 2000.

"But this growth is not enjoyed by all sectors: manufacturers suffered a sharp fall in output between January and February.

"Strong independent survey data has yet to translate into a growth trend for manufacturers, meaning that early rate rises would be a further blow to this hard-pressed sector."