The decision was widely expected by economists, who believe that any rise in the cost of borrowing could damage the UK’s fragile economic recovery.
Also as expected, the bank has not pumped any more money into the economy under its quantitative easing (QE) programme – for now at least.
Last month the Bank halted QE, having spent £200bn to boost the economy.
Under QE, the Bank has bought assets in order to boost lending to businesses and individuals by commercial banks.
But the Bank has said that the full effects of QE will take more time to filter through to the economy.
Many analysts argue that banks have not in fact increased lending as the economy begins to recover. Banks in turn argue that businesses are looking to pay down debt rather than take out new loans.
The Bank must also be wary of the inflationary pressure caused by QE.
The latest inflation figures, released last month, showed prices rising by 3.5% in January, the fastest annual pace for 14 months. This compares with 2.9% the previous month.
As a result, the Bank’s governor, Mervyn King, had to write a letter to the chancellor explaining why prices were rising so quickly.
A letter from the governor is required if inflation is more than one percentage point above or below the government’s 2% target.
However, Mr King said that the rise in inflation was temporary, and was largely the result of the rise in VAT to 17.5% in January.
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