The Bank of England sat on the fence on Thursday, holding interest rates at 5 per cent as its monetary policy committee bought time to see how the oil shock and credit crisis will affect the economy.

The MPC did not explain its decision, as usual when there is no change, but statements from committee members over the past month have indicated they cannot yet gauge whether the economy is deteriorating much faster than desired, or whet-her there is a risk of high inflation becoming a feature of British life once again.