The Bank of England decided to keep interest rates on hold at 0.5% again, meaning the cost of borrowing has been left unchanged for the third consecutive month.

Considering that interest rates cannot really go any lower, the bank continues to focus on quantitative easing. Base rates are now expected to remain at historically low levels until 2010 at the earliest, according to Jones Lang LaSalle (JLL), with a rise to coincide with strengthening demand growth.

Ian McCafferty, CBI Chief Economic Adviser, said: “With the quantitative easing programme now in its fourth month, the level of interest rates is not currently the main concern of the MPC. There are some encouraging, if tentative, signs that the quantitative easing programme is reducing the downside risk to the economy, but monetary and lending conditions remain fragile. The Bank is likely to need to continue to use the quantitative easing tool in coming months.”

According to James Thomas of JLL, there are tentative signs that the pace of decline in house prices is beginning to moderate. He said of UK residential property: “The three-month Libor rate, on which most mortgages are based, has fallen from 1.45% at the beginning of May to 1.28% now. The fall suggests that liquidity is starting to come back to the money markets which will hopefully feed through to mortgages.

“However, it is still too early to suggest that the housing market has bottomed out. Mortgage approvals are still down - the latest statistics from the Council of Mortgage Lenders (CML) show that total mortgage lending fell to £10.4bn in April from £11.4bn in March. Furthermore, rapidly rising unemployment and limited access to credit continue to weigh on the housing market.”

Paul Guest, head of EMEA research at Jones Lang LaSalle, said of UK commercial property: “With weaker business sales and lower growth forecasts across the globe, occupiers are under increasing pressure to reduce their real estate footprint. Cost cutting and space efficiency targets are high on the agenda, resulting in the first signs of occupier led space coming to the UK markets. Further rental declines and increasing incentives are expected.”