Interest rates pegged at 0.5pc

Rate-setters on the Monetary Policy Committee (MPC) also left their 200bn programme to pump money into the economy unchanged following a two-day meeting.

The decision follows a policy split on the MPC last month when Andrew Sentance voted to increase rates to tackle inflation, currently above the Bank's 2 per cent target at 3.4 per cent.

But fellow committee members have warned it is too early to act, with the recovery still uncertain and Chancellor George Osborne's savage Budget squeeze likely to slow the economy.

Recent surveys have flagged up slowing growth among manufacturers and services firms, casting doubt over the recovery.