Financial experts are now predicting the Bank of England will reduce interest rates in December after it voted to hold the cost of borrowing this month.

The Bank's Monetary Policy Committee decided to freeze the base rate at 5.75% for the fourth month in a row, despite recent data showing increasing pressure on the economy.

The housing market and consumer spending are also being squeezed, while stock markets both here and abroad have been hit by the global credit crunch.

The MPC's decision is believed to have been a close call, and economists think rates could come down as early as next month, with two cuts - to 5.25% - expected by next summer.

It comes as Halifax issued a warning that house prices fell for the second month in a row during October after dipping 0.5% - the first consecutive monthly decline since spring 2005.

The British Retail Consortium also recently said that high street sales slowed to their lowest level in almost a year last month.

The organisation said it is disappointed at the decision to freeze rates and called for the Bank to help struggling firms.

BRC director general Kevin Hawkins said: "It's disappointing that the Bank has failed to deliver the shot in the arm customers and retailers desperately need.

"With evidence mounting that a serious recession is looming in the US and consumer confidence and disposable incomes slipping here, the MPC should have taken pre-emptive action to avoid more serious knock-on effects to the UK economy."

But Steve Radley, chief economist of manufacturers' organisation EEF, said: "While an interest rate cut should now be on the Bank's radar, it is sensible to wait for more evidence on the likely slowdown in economic growth.

"But the MPC should stand ready to cut rates if the world economy or confidence deteriorates significantly."

Philip Shaw, Investec chief economist, added: "Surveys and other indicators are pointing towards a slowdown in the economy and we continue to expect interest rates to fall over the coming months."

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