The MPC voted unanimously in favour of holding rates.

In recent months inflation has reached record highs as the CPI (Consumer Prices Index) measure of inflation jumped to 2.5% in June from 2.1% in May.

The trend continues a recent spike in inflation.

Inflation has been above the bank's 2% target since May. It said although the figure is now expected to rise to close to 4% in the final quarter of the year, it would fall back close to its 2% target.

The Bank of England will also keep up its £875bn quantitative easing programme, with a 7 to 1 vote in favour.

Market commentators have not been surprised by the choice to hold rates and maintain quantitative easing.

Hinesh Patel, portfolio manager at Quilter Investors, said: “With so many economic unknowns still present, it’s no wonder the MPC has chosen to keep the wheels spinning and will wait longer to start putting the brakes on. Inflation may well have breached the Bank’s target for two months in a row now, but the Bank still interpret this bout of price increases as being transitory.”

Adam Walkom, co-founder of Financial Planning firm Permanent Wealth Partners, does not expect the bank to raise rates any time soon.

He said: "When it comes to interest rates, the Bank of England, like every other Central Bank around the world, is committed to let the economy run hotter for longer, as it is looking to see some inflationary pressures as a sign that the economy is growing quickly. With this philosophy, there is no way they will raise rates any time soon. They will do their best to warn around inflation if it does start to really perk up, but words and action are two very different things."