With inflation picking up to 4% the Bank’s Monetary Policy Committee was in no mood to cut the rate.

The MPC voted 6-3 to keep the base rate on hold.

Although inflation is expected to drop in the coming months it remains unpredictable and experts expect the bank’s base rate to remain at a relatively high level until mid-year at the earliest.

Last month CPI ticked up 0.1% in December to 4%.

The Bank's base rate is currently at its highest level for 15 years.

The MPC says it has no plans to waver from its strategy of trying to reduce CPI inflation towards its long-term target of 2%.

At its meeting ending on 31 January, two MPC members wanted to increase the Bank Rate by 0.25 percentage points to 5.5%. One member preferred to reduce Bank Rate by 0.25 percentage points to 5%.

The MPC sees a 'market-implied path' for Bank Rate to decline from 5.25% to around 3.25% over the next year or so, almost 1 percentage point lower on average than in the November Report.

The MPC says that since its last meeting, global GDP growth has remained subdued, although activity continues to be stronger in the United States. Inflationary pressures are abating across the Euro area and United States. Wholesale energy prices have also fallen significantly although there are "material risks" in the Middle East and from disruption to shipping through the Red Sea.

The MPC expects GDP growth is to pick up gradually during the forecast period and says that business surveys are consistent with an improving outlook for activity in the near term.

CPI inflation is projected to fall temporarily to the 2% target in 2024 Q2 before increasing again in Q3 and Q4. CPI inflation is projected to be 2.3% in two years’ time and 1.9% in three years.

The MPC says its remit is clear that the inflation target applies at all times.

Reaction to the decision has been one of little surprise but some relief that further rate rises are unlikely at present.

Nick Henshaw, head of intermediary distribution at Wesleyan Financial Services, said: “During 2023, many clients will have increased their cash allocation to take advantage of rising interest rates and will now have become comfortable with the low risk profile and relatively high returns that this strategy has provided.

“However, with expectations of rate cuts now baked in, perhaps as soon as May or June, advisers must support these clients to adjust this strategy in order to maintain the same level of returns. That means increasing their exposure to other asset classes, including equities. Platforms support advisers to manage balanced portfolios and will be a vital tool for providing this support to clients."

Rachel Winter, partner at wealth manager Killik & Co, said: “Today’s announcement marks the fourth consecutive month of rates holding that we have seen since March 2020. This news will be welcomed by households across the UK as it signals the potential easing of what has been an incredibly difficult time for many.

“While we are not out of the woods yet, the current market may present an opportune moment for investing in smaller companies. While large company shares have performed well recently in anticipation of interest rates starting to come down, small company shares are still trading significantly below their 2021 levels. For example, the FTSE 100 index has made a positive return since the end of 2021, whereas the FTSE 250 and FTSE Small Cap indices are both down over 15%."

The next base rate decision will be on 21 March.