Rates were expected to be held, but there were suspicions the looming threat of a recession may force the Monetary Policy Committee to decrease rates.
Seven out of nine of the Bank’s MPC voted to hold the rate at 5% last month, while Timothy Besley voted to increase rates to 5.25%, and David Blanchflower voted for a cut to 4.75%.
The seven members that wanted to hold rates cited rising inflation as one of the reasons they wanted to keep rates on hold.
The BoE has predicted rates will remain at 5% over the coming months, as it continues to balance risks to growth and inflation.
Ray Boulger, senior technical manager at John Charcol, says the MPC would have faced a tough decision today.
He says: “After The chancellor’s frank comments at the weekend that Britain is facing “arguably the worst” economic downturn in 60 years which will be “more profound and long-lasting” than people had expected, it is probable that the MPC discussed very seriously whether bank rate should be cut as early as today.
“Because today’s no change decision by the MPC was widely expected the main focus will be on the minutes, published on 17 September, to see whether David Blanchflower was still a lone voice in voting for a cut and whether Tim Besley has at last recognised that an increase would be inappropriate as the economy rapidly deteriorates.”
Eamonn Rice, chief executive of mform.co.uk, says the Stamp Duty reforms are useful but generally too little.
He says: “The Bank of England holds the key to unlocking the problem of mortgage availability.
“The lenders have done what they can by cutting some rates with the effect that the market is now back to the rates charged before the credit crunch hit. Base rate cuts will help revive the housing market and also boost the wider economy.”