The Bank of England's Monetary Policy Committee has resisted calls for a cut in interest rates and kept the cost of borrowing at 5.75%.

The MPC held its nerve despite pressure to follow the example of the US Federal Reserve.

But economists now believe there is a strong chance that the base rate will be reduced to 5.5% next month.

The Bank will now have more time to assess the impact of the turmoil in money markets on consumer and economic confidence.

It would also have been cautious about trimming interest rates at a time when high oil and food prices could keep inflation above the Government's target of 2%.

The Bank's last inflation report in August indicated rates will probably need to hit 6%.

The British Retail Consortium had led calls for a rate cut and argued that five rate rises in the past year have affected consumer confidence.

David Kern, economic adviser to the British Chambers of Commerce, said: "Given the worsening economic prospects, both UK and global, a cut would have been justified and would have been very helpful in restoring confidence.

"But we appreciate that the decision was an extremely difficult one for the MPC. Following the Northern Rock crisis, the Bank of England must restore its credibility and authority. It must show greater sensitivity to the problems of the wider economy, while at the same time making it clear that it will not yield to outside pressures."

Ian McCafferty, CBI chief economic adviser, added: "An interest rate cut was unlikely this month as there are, as yet, few signs of any serious damage to the real economy from the upheaval in the money markets. What's not in doubt is that the next move will be down.

"The Bank will need to be vigilant for any signs of a significant erosion of business or consumer confidence but, unless the outlook for the wider economy dramatically worsens as a result, the Bank may well sit tight until early 2008."

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