The Bank’s Monetary Policy Committee (MPC) voted 7/2 this morning to keep base rate at its current level. The two outstanding MPC members voted to increase base rate to 4%.

The decision to pause base rate came as the MPC decided it was necessary to keep inflation under control.

CPI inflation is now 2.8%, with the Bank having a target of 2%.

The Bank said: “CPI inflation has fallen to 2.8% since the previous meeting, although it is expected to rise later this year as the effects of higher energy prices continue to pass through. The risk of material second-round effects in price and wage-setting, against which policy needs to lean, is greater the longer higher energy prices persist.

“But the labour market continues to loosen, and signs of a weakening economy could contain inflationary pressures. Interest rates faced by households and businesses remain higher than prior to the conflict, which will act to reduce inflation over time.”

L&C Mortgages associate director David Hollingworth said: “Another hold in base rate will give borrowers more hope that interest rate hikes may not need to be as severe as originally feared. Most borrowers have been electing to take the security of a fixed rate but the last few months has seen growth in the numbers that are gambling on a tracker rate to not only offer an initially lower rate but potentially remain so.

“Of course, there’s no guarantee and markets have still priced in the possibility of higher interest rate rises, so borrowers should consider how well they can cope with payments rising.”

MT Finance founding director Joshua Elash said: “It is encouraging that the MPC has held base rate. This was the right thing to do. To increase it at this point could have put further strain on both lenders and borrowers.

“With a framework for peace in place between Iran and the US, we should see some stability return to the mortgage market, as well as an easing in tensions around energy costs.”

Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said: “It was expected that base rate would be held at 3.75% for another month, with the Bank of England treading carefully despite inflationary pressures.

“This decision will improve the general mood of buyers, which is still very cautious. People are paying close attention to the situation in the Middle East and its effect on energy prices – there are recent signs of improvement in outlook and activity, but it still feels hesitant.”

LRG national sales managing director Kevin Shaw said: “The Bank of England’s decision to hold rates at 3.75% is better news than we anticipated even a week ago. After a year in which the economic mood music has lurched from anticipating numerous rate cuts to as many rises, this stability is extremely welcome.”

But the impact of the decision is slightly muted for the buy-to-let market.

Fleet Mortgages chief commercial officer Steve Cox said: “For the buy-to-let market, the encouraging news is that mortgage pricing tends to be detached from short-term expectations around Bank base rate anyway.

“In recent weeks, calmer financial markets and growing confidence that tensions in the Middle East may not escalate further have helped improve funding conditions, allowing lenders across the market, including Fleet, to reduce rates. While swap rates will continue to respond to economic data and global events, advisers and landlord clients can take confidence from the fact product pricing has been moving in the right direction despite ongoing uncertainty around monetary policy.”