He cautioned that the pressure on families would continue for the next few quarters, with Britain in the "teeth" of the income squeeze and real wages at their weakest since the middle of the 19th century. While the rate decision itself wasn't particularly surprising, the Bank struck a relatively relaxed tone with growth forecasts revised moderately lower and inflation projections still looking relatively benign. The buildup in consumer borrowing also received attention as it has risen to levels last seen before the 2008 financial crisis - this makes raising rates even more hard as borrowers are already struggling to meet obligations in an environment of ultra-low interest rates. In minutes from its latest meeting, the BoE said GDP "remains sluggish in the near-term as the squeeze on households´ real incomes continues to weigh on consumption", as Britain gears up to exit the European Union against a backdrop of high domestic inflation.
"Monetary policy cannot prevent the weaker real incomes likely to accompany the move to new trading arrangements, but it can influence how this hit to incomes is distributed between job losses and price rises, and it can support United Kingdom households and businesses as they adjust to such profound change".
Royal London Asset Management economist Ian Kernohan said such a hike would remain unlikely until the impact of Brexit on the economy is clearer.
The Bank's rate-setting committee voted by 6-2 to leave official borrowing costs at their all-time low of 0.25%, according to minutes from their meeting released on Thursday. Growth in 2018 is also expected to slow from 1.7% to 1.6%.
Policymakers also voted to withdraw part of the mammoth economy-boosting package unleashed a year ago in the aftermath of Brexit.
The bank also said if the economy performs as it expects, the benchmark interest rate will need to rise by a "somewhat greater extent" than markets now anticipate.
But the Bank stressed that any hikes would be "gradual" and "limited".
He stated that the bank assumed a smooth transition process surrounding the Brexit process, although contingency planning was well underway for all possible outcomes.
"If UK households and businesses look through the flurry of headlines, then the economy can be expected to pick up from its current period of sluggishness".
Sterling had hit an 11-month high of $1.3234 in early trading, but fell sharply after the announcement. It expects growth of 1.7% this year, down from its previous prediction of 1.9%.
'GDP growth had been sluggish and was expected to remain so in the near term.
"The loss in real income as a result of the depreciation in sterling may also lead to some people wanting to work longer hours to make up that loss", the bank's inflation report said. A surprise drop in inflation in June may have delayed a rise.