Leading shares have edged lower after the Bank of England decided to leave interest rates at 5.5% after all.
There had been a body of opinion suggesting the Bank might in fact cut by 25 basis points today, but in the event it appears to have decided the inflation risks were too great. Most economists expect a reduction in February, however.
Martin Slaney, head of derivatives at GFT Global Markets said: "With inflation currently above the Committee's 2% target, a back-to-back cut in rates would have been a brave but potentially foolish move. The Bank has taken the view that inflationary pressures from oil and food outweighed low consumer confidence, falling manufacturing growth, a cutback in banks' lending and falling business sentiment.
"A quarter point cut next month will now be fully priced in to market's expectations, with a possible two further cuts to come during the year."
Immediately ahead of the decision, the FTSE 100 was around 24 points higher. But it has slipped back to stand at 6259.2, down 13.5 points. US futures are also lower, following a profit warning from credit card and banking company Capital One rekindled fears about the credit crunch.
Back in the UK, British Energy added 20p to 598.5p after the government gave the go-ahead to new nuclear plants. Centrica, which said it would be interested in taking equity stakes in any new stations, was 4.25p better at 349.25p.
