The Bank of England has kept interest rates on hold at 0.75 per cent – and warned that borrowing costs would stay lower for longer if Brexit uncertainty is prolonged.

Members of the Bank’s nine-strong Monetary Policy Committee (MPC) voted unanimously to keep rates unchanged in its last meeting before the UK is due to leave the European Union on October 31.

According to minutes of the meeting, the MPC said it expected Britain to avoid a recession but said that growth in the third quarter is like to be weaker than previously forecast at 0.2 per cent.

It said that growth was being hampered by Brexit uncertainty becoming more “entrenched”, adding that mounting political chaos and the growing prospect of a potential snap election will continue to pile the pressure on the economy.

And while it vowed to keep inflation in check, the MPC said it will leave the door open to a cut if the Government is unable to resolve Brexit

“Political events could lead to a further period of entrenched uncertainty about the nature of and the transition to the UK's eventual future trading relationship with the EU,” it said.

“The longer those uncertainties persisted, particularly in an environment of weaker global growth, the more likely it was that demand growth would remain below potential, increasing excess supply.”

The MPC reiterated previous warnings that a no-deal scenario will see growth slow, the pound soar and inflation rise, but added that rates could do in “either direction” as tries to balance rising inflation caused by the pound with falling growth.

A “gradual and limited” rise in rates would be likely to keep inflation in check should a “smooth Brexit” happen, it added.

Rob Johnston, chief executive of Cumbria Chamber of Commerce, said that while he expected the rate to be kept on hold, the Bank’s next move would be more likely a cut than an increase as it waits to see the outcome of Brexit.

“If there is a no-deal Brexit at the end of October, we anticipate an immediate rate cut to stimulate the economy,” he added.

Chair of the Cumbria branch of the Institute of Directors, Barry Leahey MBE, stressed the weight Brexit uncertainty was having on the business community.

“The interest rate not moving gives business leaders in Cumbria a tiny bit of certainty moving into a period filled with uncertainty,” he said.

“It is important that we realise though that monetary policy is steered by global events, not just the Brexit fears, and as leaders we need to be competitive on the world stage.”

The Institute of Directors’ chief economist, Tej Parikh, said the Bank’s monetary policy remained a “hostage to uncertainty”, adding that it had little leeway in its decision.

Following the MPC’s meeting in August, Mr Parikh had said the Bank “must not shy away” from cutting interest rates this month if a disorderly Brexit is on the cards.

“If a disorderly Brexit does appear likely to materialise, the Bank must be ready to countenance a special intervention to shore up confidence,” he said.

But, building on Mr Leahey’s comments he said the Bank’s decisions were being driven by other factors than just Brexit.

“The ongoing US-China trade war and slowing growth among key trading partners are also subduing the UK economy, and strengthening the case for supportive monetary policy,” he added.

Interest rates in America were reduced for a second time in 2019 this week amid the trade war and slowing global growth.