The Bank of England today kept the base rate at 0.5% – despite widespread predictions that it would cut the rate for the first time in more than seven years.

The base rate is the Bank of England's official borrowing rate, which influences what borrowers pay and savers earn.

Many economists had said they expected a reduction in the rate from 0.5% to 0.25% to help boost the economy in the wake of last month's Brexit vote. But the Bank of England confounded expectations and announced the rate will stay at 0.5% – as it has since 2009.

At its meeting yesterday, the Bank of England's Monetary Policy Committee (MPC) voted by a majority of eight to one to maintain the base rate at 0.5% – with the single dissenting member voting for a cut to 0.25%.

The decision to hold the base rate at 0.5% was welcomed by MoneySavingExpert.com founder Martin Lewis:

The pound rose immediately after the announcement at noon – at 1pm today £1 bought €1.20 and $1.33.

However, in its summary of its decision to maintain the 0.5% base rate, the Bank of England warned of the impact of last month's Brexit vote on the UK economy.

It said: "Official data on economic activity covering the period since the referendum are not yet available. However, there are preliminary signs that the result has affected sentiment among households and companies, with sharp falls in some measures of business and consumer confidence.

"Early indications from surveys and from contacts of the Bank's agents suggest that some businesses are beginning to delay investment projects and postpone recruitment decisions. Regarding the housing market, survey data point to a significant weakening in expected activity. Taken together, these indicators suggest economic activity is likely to weaken in the near term."

What happens next?

The MPC will consider how the outlook for the economy has changed following the referendum result and publish its new forecast in its forthcoming 'Inflation Report' on Thursday 4 August.

The summary published today added: "The MPC is committed to taking whatever action is needed to support growth and to return inflation to the target over an appropriate horizon. To that end, most members of the committee expect monetary policy to be loosened in August."