The policy is meant to curb soaring inflation but has taken time to feed into the economy and last month saw the headline inflation rate staying stubbornly above 10%.

The monetary policy committee voted by a majority of 7–2 to increase bank rate by 0.25 percentage points, to 4.5%.

They also said that the rate is likely to rise again later this year to 4.75%, suggesting that inflation will not be falling at the rate they hoped.

UK GDP is expected to be flat over the first half of this year, although underlying output, excluding the estimated impact of strikes and an extra bank holiday, is projected to grow modestly, the Bank said.