Bank of England keeps UK interest rates on hold at 0.1%

City wrongfooted after committee decides to hold rate despite forecast of 5% inflation by spring

The pound fell heavily after the the Bank of England wrongfooted the City by leaving interest rates at their record low level of 0.1%, despite forecasting a jump in inflation to 5% by next spring.

Sterling dropped by more than two cents against the US dollar when it emerged that only two members of Threadneedle Street's nine-member monetary policy committee voted for a rise, confounding expectations of an increase in the cost of borrowing to 0.25%.