The cost of borrowing remains unchanged at 3.75% following the last Bank of England interest rate meeting to be chaired by Sir Edward George.
Sir Edward is stepping down after ten years
Despite pressure from some industry leaders, and worries over the continuing slump in UK manufacturing, the Bank's Monetary Policy Committee (MPC) voted not to reduce rates from their lowest level since 1955.
Some economists fear that lower borrowing rates will fuel an unsustainable house price boom.
The committee's decision will also have been influenced by recent signs of recovery in the UK economy as a whole.
In the last week, the CBI has reported a jump in demand in the retail sector, and encouraging figures for the important service sector have been published.
The manufacturing sector remains in recession, even though the weaker pound makes British goods more attractive to the European market.
The decision to keep rates unchanged was criticised by unions and some business leaders.
Ian Brinkley, senior economist at the TUC, said: "UK manufacturers will be
disappointed. With so much economic uncertainty across the world, a cut now
would have given industry more confidence to invest."
British Chambers of Commerce director-general David Frost said: "Inflation may be hovering about its target but sales in most sectors are relatively weak.
Call for cut
"The value of the pound may be falling, but considering the eurozone's economic performance, Britain's exports may not see a rapid improvement in sales."
The Chambers has joined calls from business groups for a cut in interest rates
while output growth is weak and sales are under control.
Ian McCafferty, CBI chief economic adviser, said: "This would have been a
timely moment to give the economy a helping hand.
"There is little hard evidence that the recovery is gathering sufficient
momentum. Sterling seems to have stabilised after its sharp fall last month and
in the current economic climate there is no risk of significant pressure on
"Business will now hope for a rate cut next month to drive the economy out of
this sluggish spell."
Bank of England deputy Mervyn King will take over from Sir Edward as governor at the end of June.