Our economics editor, Larry Elliott, says there are five good reasons for leaving interest rates on hold:

Firstly, the Bank wants to have a closer look at the state of the economy before moving. There has been very little hard data since 23 June but the picture will be clearer by the time of the next MPC meeting in early August, which coincides with the release of the Bank’s quarterly assessment of the state of the nation.

This will provide forecasts for growth and inflation over the coming months, and provide a justification for whatever the Bank decides to do.

Secondly, the financial market reaction since the referendum has been less acute than looked likely in late June. Share prices have bounced, the pound has stabilised and even edged up a bit on the foreign exchanges, and long-term interest rates have fallen.

Thirdly, the economy has received something of a stimulus from the fall in the pound – which boosts exports – and from the Bank’s decision to ease the capital requirements on commercial banks, which increases their capacity to lend.

Fourthly, it is hard to see what material effect a cut in interest rates to 0.25% will have, given that they are already at record low levels. The situation is different now from the aftermath of Black Wednesday in September 1992, when borrowing costs could be cut aggressively from 10%.

Finally, there was a risk that by acting in a kneejerk fashion, the Bank could make matters worse. If consumers and businesses get the impression that the Bank is being rushed into action, it could further dent confidence.

More reaction is flooding in, and many economists are saying the Bank made the right call by leaving interest rates unchanged.

Andrew Sentance, senior economic adviser at PwC, calls it a “very sensible decision”.

Sentance, a former member of the MPC, argues that the Bank should also sit tight in August:

Though political events have been fast-moving, there is a need for stable economic policy until we are clearer how the economy is performing in the wake of the EU Referendum result. That will not be clear until the Autumn, and the MPC should hold fire until then. The MPC still won’t have enough information in August to make a proper assessment of the post-Brexit economic situation.

“Looking further ahead, the MPC needs to recognise that interest rates are already extremely low and have been for seven years. So there is very little that monetary policy can now do to support the economy. We need to look to fiscal policy - government spending and tax measures - and supply-side policies, which aim to make the UK a more attractive environment for business activity, to offset the shock of the Brexit decision.”

Arnaud Masset, market analyst at Swissquote Bank, believes the Bank is rightly hesitant to commit to any major moves while the Brexit situation is uncertain.

This wait-and-see approach is now appropriate, especially given the fact that the UK’s future relationship with the EU remains so unclear. The BoE will continue to wait for the smoke to clear before pushing the panic button.”

Ranko Berich, Head of Market Analysis at Monex Europe, says it all depends on the data:

“The Bank of England has stayed true to form and today’s decision is consistent with its “wait and see” approach to monetary policy.”

As recently as this week’s FPC testimony, Carney was emphasising that the direction of the monetary policy response to Brexit would depend on the relative effects of demand, supply, and sterling. Under this model, the BoE’s decision to hold fire on rates makes sense as there’s not yet enough data to decide on the appropriate response, even if most committee members are clearly leaning towards easing policy.

City analyst Louise Cooper questions whether a rate cut would actually do any good:

James Andrews, Head of Investment Management at Redmayne-Bentley, an investment management and stockbroking firm, cautions that an August rate cut isn’t guaranteed:

“It remains to be seen whether we will see a cut next month once the Bank of England have more hard data on the economic impact of the vote to leave. It’s clear that currently all they have is sentiment, rather than hard data on which to base a decision, and have therefore erred on the side of caution.

In the short term, we would expect further pain for domestically focussed UK listed companies as no further stimulus/support for the economy has been forthcoming at this time.”

Alan Clarke, economist at Scotia Bank, has blasted Mark Carney for creating the impression that the Bank of England might cut rates today.

He writes that Carney, who was famously labelled an ‘unreliable boyfriend’ early in his tenure, should have known better.

If ever there was a case for abandoning forward guidance and central bankers keeping quiet, this meeting is it.

Virtually nobody was going for a rate cut at this meeting before Carney’s intervention a couple of weeks ago. Most assumed that the weakness of the pound and the need to wait for incoming data would lead to a pause at least until August. But for no apparent reason, Governor Carney decided to tease the market, let it price in a high probability of a rate cut, only to disappoint.

As if the situation wasn’t volatile and uncertain enough, the BoE Governor poured petrol on the flames. This was a completely unnecessary intervention.

Lionel Barber, editor of the FT, reckons the Bank of England didn’t want to cause alarm by slashing rates today.

Sky News’s Dharshini David believes the BoE needs more evidence about the UK economy following the Brexit vote.

Economist Marc Ostwald reckons the Bank made the right decision.

You can see the minutes of the meeting online, here.

The key section comes at the end, where the Bank explains that its policymakers decided to resist easing monetary policy until they have done more analysis of the situation.

Here’s a flavour (I’ve bolded up the key points).

The MPC was committed to taking whatever action was needed to support growth and to return inflation to the target over an appropriate horizon. To that end, most members of the Committee expected monetary policy to be loosened in August.

The Committee reviewed a range of possible stimulus measures and combinations thereof. It considered the potential interaction between various measures and the financial system, and therefore their influence on output and inflation. Committee members had an initial exchange of views on various possible packages of measures.

The exact extent of any additional stimulus measures would be based on the Committee’s updated forecast. Their composition would take account of any interactions with the financial system and their effectiveness in supporting the domestic economy. Further detailed analysis across all policy areas of the Bank would be required.

Against that backdrop, most members judged it appropriate to leave the stance of monetary policy unchanged at this meeting.

For one member, the subdued economic outlook before the referendum had already come close to warranting further stimulus. The early evidence supported the view that demand was likely to weaken further following the referendum. The resulting outlook for medium-term inflation – even taking into account the boost from the lower level of sterling – therefore justified an immediate loosening of monetary policy, to be supplemented by a package of additional measures in August.

So, Mark Carney then proposed leaving interest rates on hold -- most of the committee backed him.

However the newest member, Gertjan Vlieghe (a former hedge fund economist) pushed for an immediate rate cut.

The Bank of England’s agents, who work across the UK, are seeing signs that the economy is weakening.

It says:

Official data on economic activity covering the period since the referendum are not yet available. However, there are preliminary signs that the result has affected sentiment among households and companies, with sharp falls in some measures of business and consumer confidence.

And the BoE singles out the housing market as a significant concern:

Early indications from surveys and from contacts of the Bank’s Agents suggest that some businesses are beginning to delay investment projects and postpone recruitment decisions. Regarding the housing market, survey data point to a significant weakening in expected activity. Taken together, these indicators suggest economic activity is likely to weaken in the near term.

The Bank of England has also delivered a clear signal that it will ease monetary policy in August.

The minutes of today’s meeting state that:

“In the absence of a further worsening in the trade-off between supporting growth and returning inflation to target on a sustainable basis, most members of the Committee expect monetary policy to be loosened in August,

“The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round.”

That will give the Bank’s economists more time to actually see the impact of the Brexit vote on the UK economy.

The pound is surging!!

It’s up by two cents against the US dollar, to $1.336, following the surprise decision to leave interest rates at 0.5%.

Breaking news! The Bank of England has left interest rates unchanged, dashing expectations of a rate cut.

More to follow!

It’s no secret that the US government is very concerned about the Brexit vote.

And that’s why Treasury secretary Jack Lew is racing to London from Berlin today, where he’s been meeting Germany’s finance minister.

Before jumping on his flight to meet chancellor Philip Hammond, Lew told reporters in Berlin that both sides need to be pragmatic and flexible.

Reuters has the key quotes from Lew:

“I will be meeting with the new chancellor this afternoon, I look forward to it.

“We believe that it is in the best interests of Europe, of the United States and the global economy to end up with a result that produces a highly integrated relationship between the UK and the EU.

“We think it is critical that negotiations take place in a pragmatic, transparent and smooth manner and for both sides to demonstrate flexibility.

Lew has originally been expecting to meet George Osborne, before Theresa May wielded the knife with such vigour.

Cutting interest rates to fresh record lows would be a start, but it’s not enough to rescue the economy from the swamp of a Brexit-induced recession.

Britain also needs a big dose of government spending to help the real economy, in a reversal of George Osborne’s austerity agenda.

That’s the Guardian’s view. Here’s a flavour:

The Bank should drop rates, starting this Thursday. But while historic, even a cut would not achieve what might be expected in normal times. Interest rates are already very near what’s called the zero lower bound – the point at which cuts will not stimulate further growth.

As for the Bank going in for more quantitative easing, £375bn has already been pumped into the financial system, benefiting the rich and pumping up London house prices. The real boost to growth will only come with a big burst of public spending on infrastructure, services and benefits – the areas that have suffered most under austerity. Theresa May has already talked about infrastructure bonds, but she will need to go a lot further than that.

That may be ideologically uncomfortable for the Tories, now seeking ways to mitigate economic and social damage from the referendum they called. But they should consider the words of Mr Carney: “One uncomfortable truth is that there are limits to what the Bank of England can do.”

Here’s a video clip of Britain’s new chancellor telling the nation not to expect an emergency budget this summer:

Britain’s stock market has hits its highest level since the turmoil of last summer, as investors await the Bank of England’s decision in three hours time.

The FTSE 100 index of major blue-chip companies jumped by almost 1% in early trading to 6,742, a level not seen since August 2015.

The rally is led by miners, including Anglo American and UK housebuilders such as Barratt Development and Taylor Wimpey.

That suggests investors are anticipating fresh action from the Bank of England to help the economy.

The FTSE 250 index, which contains more UK-focused firms than the FTSE 100, has risen by 0.6% today.

Tony Cross of TrustNet says the sight of Theresa May getting down to work has brought calm to the City.

The FTSE-100 is bounding higher ahead of that key MPC rate verdict that’s due at midday and perhaps once again an air of confidence that’s building in the market as the new prime minister announces her cabinet.

That said, a cut from Mark Carney today is far from guaranteed and there’s also this theme emerging of trying to ensure that the BoE doesn’t actively talk the country into recession.

The pound is rallying his morning, up three-quarters of a cent against the US dollar at $1.322.

That suggests traders aren’t expecting a massive new stimulus boost from the Bank of England (as this would typically weaken the currency).

Investors may also be reassured that Britain now has a new prime minister, and will soon have a new cabinet. That provides more certainty, despite one surprising appointment....

Philip Hammond is now speaking on Sky News, as his whistle-stop tour of the TV studios continues.

He warns that the UK economy has “taken a shock”, as businesses and consumers weren’t expecting the public to vote to leave the European Union.

The number one challenge is to stabilise the economy, send a message that Britain is “open to business”.

He adds:

We are not turning our back on the world. We are determined to maintain our outward-looking stance, and determined to maintain the prosperity of our people.

Britain’s new finance minister has given the Bank of England a vote of confidence, as it prepares to possibly cut interest rates.

Philip Hammond has told the BBC that Mark Carney is doing an “excellent job”, and revealed he’ll be meeting the governor this morning.

He also warned that the UK economy is already suffering from Brexit uncertainty.

Hammond has also confirmed that he won’t deliver an ‘emergency budget’ in the next few weeks.

“The prime minister made clear we will do an autumn statement in the usual way in the autumn and we’ll look carefully over the summer at the situation.

I’m seeing the governor of the Bank of England this morning and we’ll take stock of where we are.”

The emergency budget idea was floated by his predecessor George Osborne - who has been relegated to the back benches.