THERE has been something of a mixed reaction to the Bank of England’s decision to keep interest rates on hold for the fifth month in a row.

The Bank’s monetary policy committee voted to keep rates at five per cent yesterday, insisting it was the right move as it prioritised the fight against soaring inflation.

But with economic growth stalled between April and June, leaving the country teetering on the edge of a full-blown recession, we would argue that giving homeowners and borrowers some relief should have been the priority this time.

When we refer to borrowers we do not just mean individuals with personal loans. We mean small businesses with overdrafts and loans to pay off. These firms are employers and the harder it is for them to meet their repayments the more likely it is that staff will be made redundant.

More job losses, higher costs for business and the recent significant drop in the value of the pound all add to inflationary pressure.

We would have liked to have seen a cut of at least a quarter of a percentage point with a further reduction in November when the Bank thinks inflation will peak.

A cut in rates yesterday would have lifted the gloom just a little at a time when pessimism is as much a threat to the economy as the credit crunch and rising food and energy prices.

The Bank will insist it is doing the right thing by concentrating on controlling inflation. The average mortgage payer might beg to differ.