BoE: Interest rates held at 0.50pc

The MPC also said it would make no change to the amount of monetary stimulus it provides through quantitative easing.

The decision to hold both rates and QE at current levels was widely anticipated with the BoE having previously confirmed its plans to hold as part of its forward guidance policy.

Barry Naisbitt, chief economist at Santander UK, said: “Given the major change in the approach to monetary policy announced last August, the Monetary Policy Committee was not expected to do anything other than hold Bank Rate again this month.

“The decision was made against a background of continued positive news on economic activity and debate about the forward guidance policy. The UK economy is estimated to have grown by a further 0.7% in the final quarter of last year and the survey indicators of activity point to that momentum having been carried into the start of this year.

“Importantly, the unemployment rate has fallen much faster than the MPC expected back in August and, at 7.1% in November, has rapidly approached the 7% policy threshold. This is leading to a rethinking of forward guidance.

“At the same time, inflation has fallen back to 2%. This will give some comfort to the MPC in that it supports scope to hold rates at their current level for a while longer.

“However the real interest this month will be on the Inflation Report which is published on 12 February and the changes that the MPC makes to its forward guidance approach.”