The Bank of England kept interest rates at their record low of 0.5% today despite warnings that inflation could rise to 5% in coming months.
The vote by the Bank's nine-strong committee is likely to have been finely balanced after pressure for higher rates intensified in recent weeks.
Policymakers last changed the borrowing rate in March 2009 but the CPI measure of inflation rose to 3.7% in December - well above the Bank's 2% medium-term target - and governor Mervyn King has warned it could hit 5%.
Business leaders applauded the bank's decision and said any change in borrowing costs would jeopardise the UK's faltering recovery, particularly after economic output contracted by 0.5% in the final quarter of 2010.
With 68% of mortgage lending being at variable rates, the decision will also be welcomed by many homeowners, who continue to enjoy low levels of repayments.
The Bank's Monetary Policy Committee also voted to keep its programme of quantitative easing unchanged at £200 billion sterling to encourage growth.
Inflation in the UK is being driven higher by the increasing price of petrol, food, clothes, heating and the recent rise in VAT to 20% from 17.5%. This is proving particularly painful for consumers because wages have failed to keep pace with the price rises.
The Bank of England would have seen its latest inflation report, which will not be made public until next week, before the decision. The report is expected to reveal further rises in costs.
Some economists argue that rates will be left on hold all year and that the threat from inflationary pressures has been exaggerated.
Speculation about a rate rise was fuelled by last month's meeting when committee member Andrew Sentance, formerly a lone voice calling for a hike, was joined by Martin Weale, which meant just three more votes were needed to change policy.
