BREXIT developments, and particularly the response of households, businesses and asset prices to them, remain the most significant source of economic uncertainty, the Bank of England has declared.

The Old Lady of Threadneedle Street highlighted the economic uncertainty created by Brexit as it announced yesterday that it had held UK base rates at 0.5 per cent at the end of its latest meeting on Wednesday, as expected by economists. Base rates were raised by a quarter-point, from their record low of 0.25 per cent, last month.

The Bank said yesterday that the MPC remained of the view that, were the UK economy to follow the path expected in November’s inflation report, “further modest increases in Bank Rate would be warranted over the next few years, in order to return inflation sustainably to the target”.

It added: “Any future increases in Bank Rate are expected to be at a gradual pace and to a limited extent.”

Data on Tuesday from the Office for National Statistics showed annual UK consumer prices index inflation rose from three per cent in October to 3.1 per cent in November.

Annual CPI inflation, which was at 0.3 per cent in May last year ahead of the Brexit vote, has surged as sterling’s post-Brexit vote weakness has pushed up import prices.

The Bank of England said: “Developments regarding the United Kingdom’s withdrawal from the European Union - in particular the reaction of households, businesses and asset prices to them - remain the most significant influence on, and source of uncertainty about, the economic outlook.”