With the Budget just a matter of weeks away, the decision to hold was widely expected.

The Monetary Policy Committee (MPC) voted in a slim majority of 5-4 to maintain the rate at 4%, the opposing members preferred to reduce the rate to 3.75%.

The committee believes that inflation has peaked, saying the risk from greater inflation persistence has ‘become less pronounced recently’.

Suren Thiru, economics director at ICAEW reacted to the hold, saying: ‘Keeping interest rates unchanged will feel like a particularly tough break for those consumers battling against high mortgage costs and firms fearing more tax hikes in the Budget.

‘The Budget is a notable obstacle to a December rate cut as while higher taxes can be deflationary, the upward pressure from any rise in business costs may mean that inflation is more stubborn than the Bank of England is forecasting.’

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