7th March 2008
The decision was in line with analyst and market expectations.
Analysts have highlighted that the Bank faces the threat of a slowing economy at a time when inflationary pressures are increasing.
In February, the bank cut rates by a quarter of a percentage point from 5.5%, amid signs of a slowdown.
February's interest rate cut was the second lowering of UK rates in three months, with the previous reduction coming in December last year.
While the UK has cut rates, the reductions have been less dramatic than in the US, where the Federal Reserve has lowered rates from 5.25% in September 2007 to the current rate of 3%.
On Thursday, the European Central Bank decided to leave its main interest rate on hold at 4% as it also tries to balance inflation and growth.
Difficult call
The Bank's decision-makers had a mixed bag of data to analyse - indicating both rising prices and slowing growth.
The price of UK manufacturers' products rose at the fastest pace for more than eight years in February, the Chartered Institute of Purchasing and Supply (CIPS) said this week.
Its output price index for manufacturers hit its highest level since the survey began in 1999.
Latest official growth figures show that the UK economy grew by 0.6% in the last three months of 2007, but the quarter saw a sharp slowdown in consumer spending.
The UK's biggest mortgage lender, Halifax, has also said that house prices are continuing to slow.
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