The Bank of England has left UK interest rates on hold at 5% for the fifth month running. The decision comes amid rising expectations that fears about a recession will prompt a cut before the end the year.
With inflation more than double the bank's 2% target, most economists had expected the bank's Monetary Policy Committee to keep rates unchanged.
But the speed and scale of Britain's economic slowdown means interest rates could come down quite rapidly once inflation has peaked. Money markets are pricing in a good chance of three quarter-percentage point cuts by this time next year.
This has led to sterling's hitting a record low against the euro, with the European currency reaching 81.87p in Asia this morning.
Economic news in recent weeks has been unremittingly grim. House prices are tumbling, unemployment is rising and consumer confidence is at rock-bottom.
