The rate-setting Monetary Policy Committee voted in a 5-4 split in favour of holding the rate, which affects a wide range of consumer loan agreements from credit card to mortgage payments.

Those who voted in favour include Andrew Bailey, Megan Greene, Clare Lombardelli, Catherine L Mann and Huw Pill.

The bank rate was lowered in December to 3.75% after being held at 4% in September’s meeting.  

Last month, the Office for National Statistics revealed that inflation had crept up to 3.4% in December, an increase from the 3.2% reported in November. 

Inflation has fallen a long way from its peak of over 10% three years ago, and the BoE now expect it to be back to its 2% target this spring.

It explains: “If the economy and the outlook for inflation evolve as we expect, there should be scope for some further cuts to Bank Rate this year. But we’ll have to judge the latest information and data at each of our meetings and set whatever interest rate is necessary to make sure that inflation stays low and stable.”

Earlier this week, markets predicted that the bank rate would be held at 3.75% in today’s meeting but cuts would be expected later this year. 

John Charcol mortgage technical manager Nicholas Mendes says the decision to hold “comes as little surprise and should not be mistaken for a shift in direction”.

“Inflation remains above target and the more stubborn elements of price growth have not softened enough to make another cut feel comfortable. The recent uptick will reinforce caution, particularly while services and food inflation remain elevated.”

“Rates were only cut in December, and monetary policy works with a lag. Holding now allows the Bank to assess whether easing wage growth and a softening labour market begin to feed through into lower underlying inflation, without creating unnecessary volatility in policy.”

“Markets have long priced a hold, so the real signal will come from the vote split and the Governor’s tone. Any indication that the door remains open to cuts later in the year will matter more than the decision itself.”

Meanwhile, RAW Capital Partners chief executive Tim Parkes says: “Having done so just before Christmas, a second consecutive base rate cut was always very unlikely; it would have been at odds with how the Bank of England has approached the challenge of reducing borrowing costs over the past two years.”

“Slow and steady seems to be the unofficial motto, especially with inflation remaining sticky. That said, it is expected that the base rate will fall further in 2026, and conditions have improved for UK borrowers.”

Also commenting, Chetwood Bank group sales director for ModaMortgages and CHL Mortgages Darrell Walker adds: “The MPC has taken a steady and cautious approach to reducing the base rate so far, and the mixed economic picture heading into today’s decision, meant lenders had already priced a hold into their rates.”

“As a result, we’re not expecting to see much of an immediate impact – either positive or negative – in response to the decision.”