The bank met expectations at the March Monetary Policy Committee (MPC) meeting, with unanimous 9-0 votes both to keep interest rates at 0.10% and the stock of asset purchases at £895 billion.

The MPC seemed more upbeat overall about the recent performance of the UK economy and its near-term growth prospects compared to its February assessment; the MPC now also expects a lower peak in unemployment.

Nevertheless, the MPC still considers there to be significant uncertainties over the outlook.

Analysts have said that the MPC seemed less concerned about rising inflation risks than the markets – although the minutes of the meeting acknowledged there were varying views within the MPC over the current amount of spare capacity in the economy and how the supply and demand sides are likely to develop.

The MPC stressed that they need to see evidence that inflation will be sustained at the target rate of 2% before tightening policy.

The March minutes said: “The Committee does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably.”

Economic forecaster EY ITEM Club suspects that the case for further Bank of England support for the economy will wane from Q2 2021 onwards as the recovery takes hold. The forecaster believes that the Bank of England is most likely to hold off from acting throughout 2021, keeping interest rates at 0.10% and the targeted stock of asset purchases at £895bn.

Kevin Brown, savings specialist at Scottish Friendly, commented: “Today marks exactly a year since the Bank of England cut interest rates to 0.1%, the lowest level in the Bank’s 325-year history.

“The move helped to support the UK economy during the pandemic but the consequences for savers has been dire. Banks and building societies have slashed returns, which has left households with nowhere to turn and their cash is now sat idly in accounts earning little to no interest.

“The government’s huge stimulus packages have drastically increased the money supply to households over the past 12 months, while spending restrictions have allowed many families to pour extra money into their savings. These two factors combined mean that overall Brits are now sitting on a massive cash pile.

“With the end of lockdown on the horizon, we are anticipating a spending frenzy as many consumers start to enjoy some of their extra cash. However, this is likely to drive inflation upwards this year which could add to savers woes if their money is still held in cash.

“Anyone with savings in a bank or building society should be aware that the real value of their cash could be further eroded if inflation does start to tick upwards. Savers wishing to protect against inflation may want to spend a little more than normal, consider investing some of their cash, or hope the Bank of England considers increasing interest rates once the economy begins to recover.”