The Bank of England has resisted the temptation to cut interest rates as it struggles to keep inflation under control.

Despite warnings that the UK is headed for recession, the monetary policy committee chose to keep rates at 5% for the fifth month in a row.

The British Chambers of Commerce predicted the Bank would have to cut rates in the autumn as the economic slowdown had a cooling effect on inflation.

Some economic analysts are predicting rates could fall as low as 3.5% next year.

Economic growth was level during the second quarter of 2008 but the Organisation for Economic Cooperation and Development has predicted negative growth in the third and fourth quarters will push the UK into recession.