The MPC voted unanimously to maintain the rate at its current level, as well as keeping quantitative easing at £435bn.
It also lowered its growth forecast for GDP in Q2, from 0.2% to zero.
The MPC’s recent May Inflation Report suggested the Bank was 'conditioned on a path for Bank Rate that rose to around 1% by the end of the forecast period' and that a slightly higher rate of growth was predicted. However, it noted that global trade tensions and the increase in the likelihood of a no-deal Brexit had changed circumstances.
CPI inflation was at 2.0% in May, although the MPC noted that it would likely fall below this 2% target later in the year, but that if the economy developed in line with its May Inflation Report, it "would be appropriate to return inflation sustainably to the 2% target at a conventional horizon".
The MPC's announcement featured Brexit prominently, concluding:
"The economic outlook will continue to depend significantly on the nature and timing of EU withdrawal, in particular: the new trading arrangements between the European Union and the United Kingdom; whether the transition to them is abrupt or smooth; and how households, businesses and financial markets respond. The appropriate path of monetary policy will depend on the balance of these effects on demand, supply and the exchange rate. The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction. The Committee will always act to achieve the 2% inflation target."
Frances Haque, Santander UK chief economist, commented:
“Given the continued uncertainty over the timing and nature of Brexit, the decision to hold rates won’t be a surprise to the market.
“Coupled with the lacklustre economic data published so far for the second quarter of this year, the MPC clearly continues to be cautious in its approach.
“Until there’s more clarity on the outcome of Brexit, it’s unlikely they will raise rates further. It now looks increasingly unlikely that we’ll see a rate rise this year.”
Kevin Roberts, director, Legal & General Mortgage Club said:
“Although we’re unlikely to see political certainty anytime soon, today’s result will come as welcome news to borrowers. Low interest rates continue to make long-term fixes appealing and healthy competition between lenders means borrowers can secure an affordable mortgage. Not only should this help existing homeowners reduce monthly repayment costs when their current deal expires, but encourage more first-time buyers to step onto the housing ladder."
