The Bank of England has kept interest rates on hold at their historic low of 0.5% for the 18th consecutive month.

The Monetary Policy Committee's decision had been widely expected, but calls have been growing for an increase in rates to curb inflation. CPI inflation was 3.1% in July, above the Bank of England's 2% target rate.

"In recent weeks there has been more talk about the need to expand monetary policy, amid concerns about how quickly growth momentum will fade in the coming quarters at home and abroad," said Lai Wah of the Confederation of British Industry.

"However, economic indicators still suggest the UK recovery is on track, although we expect it to be bumpy and slow. Our view is that monetary policy is likely to stay on hold for a while, as the Bank monitors economic developments."