The Bank of England kept its benchmark repo rate unchanged at 5.00 pct today, in line with expectations. All 29 economists polled by AFX News correctly predicted the no change verdict from the nine-strong Monetary Policy Committee (MPC). The MPC last delivered a hike in November, taking the base rate up to a 5-year high of 5.00 pct. The increase was the second of the year. "There have been occasions when the MPC felt that consecutive changes in interest rates were necessary, but November's Inflation Report indicated little pressing need to change rates immediately, or indeed for a while," said Vicky Redwood, UK economist at Capital Economics. In its quarterly economic projections, the central bank said it expects the annual CPI inflation rate to pick up in the near-term to a peak of around 2.7 pct towards the end of this year, before easing back quite dramatically towards the 2.0 pct target over a two-year horizon. By the end of the period, the central projection is for CPI inflation to be just below the target, helped by lower oil prices and the pound's recent gains which will work to depress imported inflation. The forecasts are based on market expectations of the likely path for interest rates. At present, the market expects the key repo rate to peak at an average of 5.2 pct in the third quarter of 2007 before easing back towards 5.00 pct at the end of the two-year horizon. If rates are left unchanged, the forecast is for CPI inflation to be just above the 2.0 pct target. Analysts said they will be particularly interested to read the detail of the debate when the minutes of the latest rate setting deliberations are published on Dec 20.