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With less than 100 days to go before the country is set to leave the bloc, the BOE's nine-member Monetary Policy Committee (MPC), led by Mark Carney, unanimously voted to hold interest rates at 0.75%.
The central bank also cut its growth forecasts for the U.K. economy, amid worries about Brexit and a slowing global economy.
The BOE, which assumes Britain will avoid a Brexit shock, said it now expects to see growth of 1.3% both this year and next, down from 1.5% and 1.6% respectively in its May forecast.
The decision comes at a time of growing uncertainty over the terms of Britain's departure from the EU. Newly elected Prime Minister Boris Johnson, who officially entered Downing Street last week, has vowed to deliver Brexit by October 31 "come what may " — even if that means leaving without a deal in place.
The BOE said the government's Brexit stance had prompted a "marked depreciation of the sterling exchange rate," with the pound hovering near a three-year low against a basket of other major currencies.
The U.K. currency traded down almost 0.4% at $1.2107 shortly after the BOE's decision.
"Underlying growth appears to have slowed since 2018 to a rate below potential, reflecting both the impact of intensifying Brexit-related uncertainties on business investment and weaker global growth on net trade," the BOE said.
Johnson's new team of ministers have wasted no time in espousing that message that the U.K. is now preparing for a no-deal departure. A "no-deal" Brexit is seen by many inside and outside of parliament as a "cliff-edge" scenario to be avoided at all costs.
Leaving without a deal in place would mean an abrupt departure from the EU with no transition period allowing businesses to adjust to life outside the bloc.
"The Financial Policy Committee of the Bank of England has assumed the possibility of a no-deal since the day after the referendum," Mark Carney told reporters shortly after the central bank's decision. The U.K. voted to leave the EU in June 2016.
He added the core financial sector is ready for a no-deal Brexit scenario.
"The decision of whether or not there is a deal are decisions for government in negotiations with their European partners."
Before the central bank's decision, the risk of a chaotic exit from the bloc had caused interest rate futures to price in an almost 90% chance of a quarter-point rate cut before Carney steps down at the end of January 2020, Reuters reported, citing CME Group's BOEWATCH tool.
When asked whether Gary Cohn, former chief economic advisor to President Donald Trump, was right to reportedly say that a no-deal Brexit would be preferable to endless prolonged economic uncertainty, Carney replied: "No, he's wrong."
"No deal, as a crystallization of a bad economic outcome, is not preferable to the possibility of a better economic outcome."
Carney went onto say a no-deal Brexit would also constitute an "unwelcome development" for the global economy.
The U.S. Federal Reserve cut interest rates for the first time in more than a decade on Wednesday, lowering borrowing costs by 25 basis points. The European Central Bank has also paved the way to take similar action next month.
The BOE typically bases its forecasts on official government policy — which remains to secure a Brexit deal — despite the intensifying risk of a no-deal departure.
Many economists have urged the BOE to publish different forecasts for the economy under two different scenarios: a no-deal departure and an orderly Brexit.
A year ago, the BOE raised its key rate to 0.75% and suggested further gradual tightening could be necessary if the economy performed as expected. However, the situation has changed dramatically in the last 12 months.