UK interest rates remain at 4.75% today on the back of sluggish shop sales, shaky industrial production and wobbling house prices.
The Bank of England's rate-setting Monetary Policy Committee (MPC) announced its decision at midday today after its monthly two-day meeting concluded.
Minutes of previous meetings show that the group is adopting an increasingly 'dovish' attitude toward the cost of borrowing. Six months ago analysts had thought that rates would plateau at more than 5%, but now there is growing belief that a cut is on the cards.
Businesses in the slowly-recovering manufacturing sector said Thursday's decision was the right one given the downside risks to the economy but generally solid growth in the UK.
The Engineering Employers Federation (EEF), a group representing factory businesses, said there was "no clear case" for a move in either direction in the short-term future. But it urged the MPC to remain sensitive to manufacturers' needs.
Steve Radley, EEF chief economist, said: "So far the evidence suggests that last year's rate increases have helped to rebalance the economy without damaging the recovery in manufacturing.
"However, should the business outlook start to deteriorate, the Bank should stand ready to cut rates."
Pressure on the MPC to cut interest rates increased over Christmas with the news that shop sales were at their lowest in 10 years. The British Retail Consortium said sales slumped 0.4% year-on-year in December.
"The lack of consumer confidence created by uncertainty over the economy and housing market dominated December and remains a strong concern for the sector as it shows no sign of abating in the immediate future," said a spokesperson for the group on Tuesday.