The move by the Bank's Monetary Policy Committee (MPC) was widely predicted by analysts and comes just days after the British Chamber of Commerce's (BCC) latest quarterly economic survey, which revealed that the UK could be just another quarter away from recession.

Commenting on the BoE's decsion, David Kern, BCC Economic Adviser said:

"Our members are very concerned about inflation and we have not called for an immediate interest rate cut. But the MPC cannot ignore the fact that the economic situation, as highlighted in our latest quarterly survey, has deteriorated at an alarming pace. Business confidence has plunged to historically low levels and countering the risk of recession must be an overriding priority."