The Bank's monetary policy committee (MPC) voted 5-4 - the narrowest possible margin - to leave the cost of borrowing unchanged.

Up until the inflation data was released on Wednesday morning, markets had put an 80% probability on them raising the rate by a further quarter percentage point.

Reaction to Bank of England decision - latest updates

By this morning, that probability had sunk to just below 50%.

The decision brings to an end the longest successive period of "tightening" (a lift in the cost of borrowing) in recent Bank of England history - as the MPC raised rates in 14 successive meetings.

The last time the MPC voted to leave interest rates unchanged was in November 2021.

However, the fact that four members - Jon Cunliffe, Megan Greene, Jonathan Haskel and Catherine Mann - voted to raise the cost of borrowing might be seen as a signal that in the coming months the Bank may lift rates again.

The Bank also voted to continue its programme of reversing quantitative easing - the scheme whereby it creates money to buy government bonds and pump cash into the economy.

It said over the next year it will sell off a further £100bn of bonds, cutting its total asset pile down to £658bn.

The Bank of England governor, Andrew Bailey, said: "Inflation has fallen a lot in recent months, and we think it will continue to do so.

"That's welcome news. But there is no room for complacency. We need to be sure inflation returns to normal and we will continue to take the decisions necessary to do just that."

Ahead of the meeting, economists had been torn on whether the promise of falling inflation would outweigh the Bank's concerns about rising wage inflation.

It has previously cited both of these statistics as key things to watch.

In the event, the five members who voted to leave rates unchanged judged "the latest developments meant that the judgement to keep Bank rate unchanged at this meeting rather than increase it was finely balanced" - according to the minutes of the MPC.

"Conditions were likely to warrant a restrictive policy stance being maintained until material progress had been made in returning inflation to the 2 per cent target."

That signals that there is still a significant chance that Bank rate rises again, and that even if it doesn't, it is unlikely to come down very quickly.