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BoE holds the line on rates
LONDON, England -- The Bank of England kept interest rates unchanged on Thursday for the 13th straight month as concerns over a red hot housing market outweighed worries of a weak global recovery. The BoE decision, which was widely expected, comes after the U.S. Federal Reserve cut borrowing costs by half a percentage point last month. The European Central Bank lowered its key rate by half a percentages point to 2.75 percent on Thursday. British central bankers have kept interest rates steady at a 38-year low of 4 percent since November 2001, which has helped to fuel consumer spending and a boom in housing prices that has shielded the economy from the worst of the slowdown. Mortgage lending rose at a record pace in October, pointing to continued strength in the country's booming housing market. The BoE says home loans rose by £7.9 billion in October, the biggest increase since comparable records began in April 1993. The level of mortgage lending is now 12.8 percent up on a year earlier, also the fastest rate since April 1993. Members of the BoE's Monetary Policy Committee have held off from cutting interest rates as house price inflation topped 30 percent for the first time since the late 1980s housing boom. Last week BoE deputy governor Mervyn King -- who takes over the top post next June -- said interest rates would probably not come down any further if the global economy continued to show at least modest growth. The current governor, Eddie George, has also repeated his warning that the BoE might even raise borrowing costs if consumer demand did not slow as expected. However, he qualified those comments by saying the MPC might have to cut interest rates if the world economy took a turn for the worse. Reuters contributed to this report.
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