Announcing the decision to hold rates in September, governor Andrew Bailey said cooling inflation pressure means the Bank should be able to cut interest rates gradually over the upcoming months.
But, he added, “it’s vital that inflation stays low, so we need to be careful not to cut too fast or by too much”.
The Bank also considers other measures of inflation when deciding how to change rates, and some of these remain higher than it would like.
Some parts of the economy, like the services sector – which includes everything from restaurants to hairdressers – were still seeing more significant price rises in recent months.
It has to balance the need to slow price rises against the risk of damaging the economy, and avoid cutting rates only to have to raise them again shortly afterwards.
Most economists and analysts did not expect rates to fall in August, but think the next cut may come in November.