THE Bank of England gave mortgage holders another month's reprieve as it left interest rates on hold at four per cent.
The decision means rates have been held at their 38-year low for seven months.
But city analysts believe the Bank's Monetary Policy Committee will raise rates in July or August to dampen the booming housing market.
The decision was seen as a "balancing act", with surging house prices and a robust high street on one side and a fragile economy and slow recovery in the manufacturing sector on the other.
Figures from Halifax this week showed a 4.2 per cent surge in house prices in May.
A CBI survey on Wednesday showed retail sales rose at their slowest pace for seven months, but remain robust.
The manufacturing sector is showing some recovery, but has not turned the corner.
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