BREXIT: Bank of England to hold interest rates, but expect cut in August
Members of the Bank's Monetary Policy Committee voted 8-1 to hold rates, but minutes of the meeting showed most expect action to be taken next month.
One member - Gertjan Vlieghe - voted for an immediate cut to 0.25% amid signs that the EU referendum decision was already hitting parts of the economy, with growth set to come under further pressure.
But the minutes of the MPC meeting showed the economy had been resilient in the run-up to the vote, with the Bank now expecting second-quarter growth to pick up to around 0.5%, from 0.4% in the previous three months.
Most policymakers wanted to wait until the Bank's quarterly forecasts on August 4 before taking further action as banks and financial markets have also held up surprisingly well since the vote.
Consumers may yet be in line for a further reduction in borrowing costs, though, with the minutes confirming "most members of the Committee expected monetary policy to be loosened in August".
Bank governor Mark Carney has already said that, in his personal view, a rate cut was likely over the summer and has hinted at the possibility of firing up the printing presses to deliver more quantitative easing (QE) to shore up the economy.
All nine members of the MPC voted to keep QE on hold at £375 billion this month, but the minutes showed rate-setters are looking at "various possible packages of measures".
"The exact extent of any additional stimulus would be based on the Committee's updated forecast," the Bank said.
The decision to hold rates comes despite intense speculation that the Bank would move to slash rates this month, with financial markets having priced in a cut to 0.25%.
Sterling jumped one cent against the dollar, rising from 1.32 to 1.33 dollars, almost 1%, after the no change vote.
The FTSE 100 Index tailed off slightly following the MPC announcement, edging down 5.9 points to 6664.3.
Economist Paul Diggle, of Aberdeen Asset Management, said: "The Bank of England has decided that patience is a virtue.
"There's going to be a bit of disappointment in financial markets. They had taken Carney's earlier comments about easier monetary policy to heart and forgot his reputation for changing his mind.
"But the next meeting is only three weeks away, and by then Carney and his colleagues will have a few extra post-referendum data points to digest as well as a new set of forecasts. The market should get its way then, with an interest rate cut likely and renewed quantitative easing possible."
The Bank said it had taken some "reassurance" from signs that financial markets were weathering the Brexit vote.
While the pound had plunged in value, hitting 31-year lows against the US dollar last week, equities had already surged past levels seen before the referendum.
Banks and wholesale money markets were also holding up well, added the Bank.
"The improved resilience of the core of the UK financial system and the flexibility of the regulatory framework, had allowed the impact of the referendum result to be dampened rather than amplified," according to the minutes.
But the Bank said weakened property markets and recent figures suggesting consumer and business confidence had plunged in the wake of the Brexit vote fuelled its fears that risks from the Brexit vote had begun to "crystallise".
It cautioned the "uncertainty flowing from the referendum result was likely to be negative for near-term activity".
Brexit jitters have seen a raft of property funds go into lockdown after investors rushed to pull out their money over fears of a collapse in real estate prices.
The Bank has already unveiled a series of measures to help limit the Brexit blow, relaxing banking rules to boost their lending firepower by up to £150 billion and pledging to pump in at least £250 billion if needed to calm markets in the immediate aftermath of the Brexit decision.
It is expected that the Bank and Treasury may also look to expand its Funding for Lending scheme offering banks cheap finance on the condition they lend more.