The Bank of England's previous cut was seen as risky

The Bank of England's Monetary Policy Committee has left interest rates on hold at 3.75%.

The decision was expected after economists warned that any further cuts could send borrowing levels dangerously high and leave many Britons with excessive debt.

The Bank surprised economists last month when it cut interest rates to their lowest level since 1955.

It said at the time that the decision was "pre-emptive" and subsequent gloom from the manufacturing sector seemed to substantiate their decision.

Balancing act

But economists said any deeper cuts would be a step too far.

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"The Bank of England has shown itself capable of responding to the needs of businesses by being prepared to cut rates when it sees a threat to demand," said David Frost, director general of the British Chambers of Commerce.

"We are aware that the MPC faces a struggle trying to stimulate Britain's troubled industrial sector while containing inflation in other sectors."

Official statistics released last month suggested that UK business investment had dropped to its lowest level for five years, with manufacturing hit hardest.

However, other economic data has been mixed.

Houses not cool enough

House price rises are widely seen as cooling, particularly in London and the south east.

The UK housing boom is cooling

But they are rising nonetheless.

Recent figures from Halifax, Britain's biggest mortgage lender suggested a 23% rise in property prices over the past 12 months and a 1.7% lift in February.

Earlier this week, the International Monetary Fund (IMF) warned the UK that it could be facing a dangerous house price bubble if interest rates went any lower.

The IMF said the UK's monetary policy should balance domestic demand with the threat of rising household debt, fuelled by soaring house prices and low interest rates.

Economists pointed to sterling's fall in value as further justification for leaving rates unchanged.

The pound has lost 5% of its value against the euro in the last month, and 4% against the dollar.

"It probably does strengthen the 'hold-off' argument," said analysts at Merrill Lynch.

Later cuts

However, economists said the MPC could well decide to cut interest rates later on in the year, with May or June the favourite months.

Some have suggested any further erosion of consumer confidence as a result of geopolitical uncertainties could mean a cut as soon as April.

And the trade union Amicus said a further cut was necessary to stem job losses in the manufacturing industry.

"A combination of a further 0.25% cut and investment in a competitive capacity by the UK manufacturing export sectors will be good for jobs and good for the economy," said Roger Lyons, Amicus joint secretary general.