Its £200bn quantitative easing programme was also left unchanged.
The nine-strong Monetary Policy Committee’s decision to hold rates was widely expected, with the need to support the economy amid fears of a double-dip taking precedence over inflationary fears. The CPI measure of inflation was 3.1% in July.
Inflationary concerns – the current rate is well above the 2% target and there are growing fears of further price rises – prompted committee member Andrew Sentance to vote for a rise in rates to 0.75% for the past three consecutive months.
But lingering doubts about the strength of the economy in the face of pubic sector cuts have prompted analysts to forecast rates will be held at their historical low until next year.
The base rate has now been at 0.5% since March 2009.
Paul Hunt, managing director of Phoebus Software Ltd, said: “The MPC will come under increasing pressure to increase rates if inflation continues to grow.
“There is some argument for the MPC to make a gesture of keeping inflation in check by raising rates by 25 basis points, but I don’t think they will. Inflation is being maintained above the target rate in order to help the economic recovery.
“Rates won’t go up until next year and quantitative easing won’t be extended unless there is a significant weakening of the economy. And despite many predicting that third quarter growth will be weaker than expected, yesterday’s encouraging manufacturing growth figures may alleviate the fears of a double dip.”
