Bank of England votes unanimously to keep interest rates unchanged

The central bank decided to maintain interest rates at 0.5% and the asset purchase programme at £375bn amid concerns about weak wage growth, low inflation and a global economic slowdown. Political uncertainty surrounding Britain’s 23 June referendum on its European Union membership was also taken into account.

“There appears to be increased uncertainty surrounding the forthcoming referendum on UK membership of the European Union,” the BoE's Monetary Policy Committee said in the minutes of the March meeting.

“That uncertainty is likely to have been a significant driver of the decline in sterling. It may also delay some spending decisions and depress growth of aggregate demand in the near term.”

The decision follows the same path taken by the Federal Reserve and the Bank of Japan this week to stand pat on policy measures.

The Fed said it now expects to raise rates twice this year compared to December's prediction for four rate hikes.

"Proceeding cautiously will allow us to verify that the labour market is continue to strength given the economic risk from abroad," said the Chair of the Federal Reserve, Janet Yellen, speaking at a press conference after the announcement on Wednesday.

The BoE has kept interest rates at a record low of 0.5% for seven years. The central bank has said it would take further action if needed to boost the economy but Governor Mark Carney has ruled out negative interest rates.

Chris Williamson, chief market analyst at Makit, said that "while the Bank stressed that rates are more likely to rise than fall over the next two years, the nagging fear amongst policymakers is that there’s little scope to use conventional rate cuts if the economy enters a new recession, and doubts hang over the effectiveness of further quantitative easing".

“The chances of the Bank having to resort to further new non-standard measures to boost the economy have therefore increased considerably in recent weeks, as rising uncertainty regarding ‘Brexit’ has compounded wider concerns about the outlook for domestic and overseas demand."

The pound rose 1.00% against the dollar at 1221 GMT.