The MPC also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion.
The decision to hold the rate was widely expected after the Office for Budgetary Responsibility cut its growth forecast for 2011 from 2.1% to 1.7% in last month’s Budget.
Some commentators argued for an incremental rise in the base rate to combat inflation which, at 4.4% in February, is more than double the MPC’s target.
The March MPC minutes also revealed a four-way split in opinion with the most hawkish member Andrew Sentance arguing for a 0.5% rise, Spencer Dale and Martin Weale calling for a 0.25% rise, Adam Posen – the most dovish – arguing for further quantitative easing, while the remaining five wanted and got a hold.
Jeff Quilter, director of strategy at HML, said: "Consumers with variable rate mortgages will welcome at least another month of grace from an interest rate rise but the Bank of England is caught between a rock and a hard place. If it increases interest rates to combat inflation levels then variable rate and tracker mortgage holders will feel the knock-on effect and their finances will face another squeeze at a time when wages have dropped in real terms. If rates stay on hold then it is possible that inflation will continue the current trend moving further away from the Government's 2% target and falling further out of sync with wages."
Ben Thompson, managing director of Legal & General Mortgage Club, said: "Until it becomes explicitly demonstrable that a sustained economic recovery is well underway, we expect the MPC to ignore inflationary pressures for as long as it can and carry on in stimulus mode. We remain of the view that rates will rise in small steps when they go, they won't rise by much and it is possible that this might not happen until later in the year."
And Jonathan Samuels, chief executive of Dragonfly Property Finance, added: "When rate rises do come they have to be implemented at a pace that does as little damage as possible to consumers and business.The property market will be especially vulnerable. While demand for property among professional investors is still robust, among owner-occupiers it remains weak. A rate rise will result in even more buyer caution, placing additional downward pressure on prices."
