The Bank of England left interest rates unchanged at 5.5% this morning, opting to take more time to assess the extent of the slowdown in the economy and of inflationary pressures.

The outcome was in line with economists' forecasts, although market expectations of a move have increased somewhat in recent days.

Most believe the bank’s Monetary Policy Committee will reduce rates in February, when the bank releases new forecasts on growth and inflation in its quarterly Inflation Report.

The bank announced its decision without comment, noting only that the minutes of this week's meeting would be published on 23 January.

The Monetary Policy Committee cut rates in December for the first time since August 2005, following a policy tightening cycle that only ended in July 2007, and which saw rates raised to a six-year high of 5.75% from only 4.5% a year before.

‘The decision to hold was most likely not unanimous,’ said Paul Guest, director of Jones Lang LaSalle’s UK research team in response to the news.

‘Financial conditions are easing following last month’s interventions and we are witnessing the upside risks to inflation on the rise.

‘Contrary to expectations early last year, utilities prices continue to escalate. Big hikes were recently announced by NPower and its rivals are expected to follow suit, while crude oil prices continue to nudge $100 a barrel.

'This will reverse the recent sub-trend growth of home energy prices and add to escalating food price inflation, where tariffs are advancing at more than twice the rate of headline CPI growth.

‘To complicate the picture, wage growth is accelerating, with the latest upswing in the retail prices index combined with a tight labour market putting negotiating power into the hands of workers. This could boost headline inflation further ahead of the 2% target. In November, the main index was up 2.1% year-on-year.’