ONE of the country's leading business bodies has expressed disappointment at the Bank of England's decision to leave interest rates unchanged.

The Confederation of British Industry (CBI) said it was disappointed the Bank of England kept interest rates on hold last Thursday, despite business concern about the economy.

It had been hoping for a cut, to boost manufacturing and the economy.

"We hoped the bank would give firms a confidence boost to help stave off fears about the economy weakening further," said Ian McCafferty, CBI chief economic adviser.

"The Baghdad bounce in the financial markets has yet to have a significant effect on the real economy and there are worrying signs of domestic weakness in retailing, housing and consumer services.

"The recent fall in sterling is unlikely to pose a significant risk of higher inflation, given the degree of excess capacity and the weakness of demand. We will look to the bank for a rate cut next month."