The Bank of England (BOE) has kept its main interest rate unchanged Thursday amid uncertainty over the economy's wider direction.
The central bank's Monetary Policy Committee (MPC) was widely expected to hold rates at their current 0.5 percent level, amid falling inflation and lackluster growth data.
The MPC voted by 6-3 to keep rates at the current level, with the bank's Chief Economist Andy Haldane joining more hawkish committee members Michael Saunders and Ian McCafferty in calling for a rate rise to 0.75 percent.
Still, the bank said that all committee members "agree that any future increases in (the) bank rate are likely to be at a gradual pace and to a limited extent."
On Thursday, the MPC said it expected U.K. growth of 0.4 percent in the second quarter, sticking to the estimate it made in its May meeting. U.K. growth was slow in the first quarter, at just 0.1 percent, but the bank reiterated Thursday that it believed this would prove "temporary, with momentum recovering in the second quarter."
"A number of indicators of household spending and sentiment have bounced back strongly from what appeared to be erratic weakness in the first quarter, in part related to the adverse weather. Employment growth has remained solid," the bank said in published minutes of its meeting.
"Although manufacturing output recorded a decline in April, and this was accompanied by a fall in goods exports, surveys of business activity have been stable and, as a whole, point to growth in the second quarter in line with the committee's May projections."
Jeremy Stretch, head of FX strategy at the Canadian Imperial Bank of Commerce, told CNBC on Thursday that there is "still sufficient uncertainty to preclude moving rates at this particular juncture."
"There is still a case to be made for the bank to be talking up the prospect of tightening up rates and saying the next move will be higher, but pushing that profile a little bit further into the middle distance," he told CNBC's "Decision Time."
Standing pat
Policymakers on the committee postponed raising rates in May following weaker-than-expected economic data. The bank also said it expected the U.K. economy to grow by 1.4 percent in 2018, downgrading its previous projection of 1.8 percent.
Against such a lackluster economic backdrop, no economists polled by Reuters expected a rate rise in June. The news agency also noted that some are getting "cold feet" about the prospect of a rate rise in August.
Market expectations are for a less than 40 percent likelihood of the MPC raising interest rates by August, with about an 80 percent chance of one more rate hike by the end of 2018, Reuters said ahead of the decision Thursday.
Sterling sank to a seven-month low ahead of the meeting, to $1.3125, but rebounded after the decision, one which comes amid continuing uncertainty over the direction of the economy, ahead of the U.K.'s departure from the European Union in March 2019.
Howard Davies, chairman of British bank RBS, told CNBC ahead of the decision on Thursday that the bank should have raised rates earlier.
"I think we'd be in a more comfortable position now if rates were 50 basis points higher. For two reasons: one, I think it would serve to dampen down the growth in unsecured credit, but also it would give you a little bit more ammunition if things do turn bad," he told CNBC's "Squawk Box Europe."
"At the moment, the problem is that the Bank of England and other central banks, apart from the Fed who have been normalizing rates quite effectively, they haven't got much to do if we do face another downturn."
With regards to its quantitative easing program, the bank signaled that now it intends not to reduce the stock of purchased assets until its benchmark rate reaches around 1.5 percent, compared to previous guidance of around 2 percent.