Bank of England warns of tough 2008

The Bank of England voted in favour of keeping interest rates unchanged in January at 5.5% due to fears of over inflation.

Mervyn King, the governor of the Bank of England, gave warning last night that the UK economy faced its toughest period in more than a decade during 2008.

Analysts are still expecting a rate cut in February, but it is not anticipated the Bank of England will follow the example set by the US Federal Reserve, which yesterday slashed interest rates by three-quarters of a point to 3.5%, the largest single cut for 26 years.