BoE holds interest rates at 0.5 per cent

The decision was unanimous, with every member of the Bank’s Monetary Policy Committee voting to leave borrowing costs unchanged.

The Bank says that recent UK macroeconomic data has been “mixed”, and it fears that growth may have slowed in the last quarter of 2017.

It said in a statement: “The recent news in the macroeconomic data has been mixed and relatively limited. Global growth has remained strong. Domestically, some activity indicators suggest GDP growth in Q4 might be slightly softer than in Q3.

“The measures announced in the Autumn Budget will lessen the drag on aggregate demand stemming from fiscal consolidation, relative to previous plans. The labour market remains tight, and surveys suggest this will continue.”

Nick Dixon, Investment Director at Aegon said: “Last month’s increase in interest rates, for the first time in a decade, was well flagged as the starting point in the Monetary Policy Committee’s drive to end the era of cheap money. However, it was always going to be highly unlikely that the Bank of England would announce a further rate rise this side of Christmas.

“That said, this week’s inflation figures will make uncomfortable reading for Mark Carney, given previous predictions that inflation had already peaked. With pressure on for wage increases and political demand for looser fiscal policy, the governor will worry about the potential for high inflation to become embedded. In our view it’s likely that rates will rise sooner than people expect and we may not have to wait long in the new year for another rate increase.”