The Bank of England left interest rates on hold for the sixth consecutive month today - despite mounting evidence of a stronger economy.
UK business leaders and homeowners welcomed the Monetary Policy Committee's decision to freeze rates at 4.75%, a move widely forecast by economists.
But experts predicted there may be room for one further tightening in the cost of borrowing in the next six months if economic data continues to strengthen.
Slower consumer spending and a steady housing market slowdown are likely to have convinced the MPC that recent interest rate rises have had the desired effect on the economy.
But inflation has been rising towards its 2% target faster than expected, moving up to 1.6% in December - its highest level in six months. This is likely to have been a key point of discussion ahead of the publication of next week's quarterly inflation report from the Bank.
Adding to the picture of a strengthening economy were yesterday's official manufacturing figures for the last quarter, which were revised upwardly, meaning the sector escaped a fall into recession.
Other data yesterday showed an unexpected improvement in the UK trade deficit to £3 billion in December, despite another record month for imports.
