In a decisive move, Andrew Haldane, the Bank's chief economist, joined two other Monetary Policy Committee members in voting to raise rates to 0.75%.
His vote for a rise was added to those of Ian McCafferty and Michael Saunders and that decision was the first time that he has voted against the majority since he became an MPC in 2014.
Rather, they judged that a modest tightening of monetary policy at this meeting could mitigate the risks of a more sustained period of above-target inflation that might ultimately necessitate a less gradual subsequent change in policy and hence a sharper adjustment in growth and employment'.
Before the decision to keep rates at the present level was announced, markets had signalled a 30 percent expectation of a rate rise for the next meeting in August. Sterling rallied against the dollar on the news, heading for its biggest daily gain in two months. "We expect a bleak economic development going forward which, coupled with the fading inflationary boost from currency development, will hold back inflationary pressures", added Nordea Bank. Yesterday, the pound reversed course after the Bank of England's chief economist unexpectedly signaled his support for a rate hike.
'But on balance I still think we might not see a rate rise for the rest of the year - policymakers will at the very least want confirmation that the weak first-quarter growth figure was just a blip before raising borrowing costs'. The pound reversed a 0.5 percent loss and traded 0.5 percent higher at $1.3235 as of 1:38 p.m.in London.
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"A number of indicators of household spending and sentiment have bounced back strongly from what appeared to be erratic weakness in Q1, in part related to the adverse weather", the Bank said.
"August would be too much of a gamble and (we) see November as the next best opportunity for a hike, assuming data strengthens more than we expect and that Brexit remains free of major disruption", Barclays economists Fabrice Montagne and Sreekala Kochugovindan said.
At the end of previous year Britain was the slowest-growing economy among the G7 group of rich nations, as businesses held back from investing ahead of Brexit and high inflation triggered by the 2016 referendum eroded households' disposable income.
In a blow to households, the Bank confirmed that inflation - now at 2.4% - was set to increase by more than it expected, pushed higher by rising oil prices and the ongoing weakness in the pound. This comes at a time of a widening gap with the United States on monetary policy. But he did endorse the MPC's new guidance on how long it will wait before reversing past asset purchases.