Once again, the Bank of England Monetary Policy Committee (MPC) has held the bank rate at 0.25%, government bond purchases at £435bn and corporate bond purchases at up to £10bn.

The central bank said it has increased its central expectation for growth in 2017 to 2.0% and expects growth of 1.6% in 2018 and 1.7% in 2019.

The upgraded outlook over the forecast period reflects the fiscal stimulus announced in the Chancellor’s Autumn Statement, firmer momentum in global activity, higher global equity prices and more supportive credit conditions, particularly for households.

The MPC said domestic demand has been stronger than expected over the past few months, and there have been relatively few signs of the slowdown in consumer spending that the Committee had anticipated following the referendum.

It added: “Nevertheless, continued moderation in pay growth and higher import prices following sterling’s depreciation are likely to mean materially weaker household real income growth over the coming few years. As a consequence, real consumer spending is likely to slow.”

The bank warned that over the next few years, a consequence of weaker sterling is that the higher imported costs resulting from it will boost consumer prices and cause inflation to overshoot the 2% target. Indeed, CPI inflation rose to 1.6% in December and further substantial increases are very likely over the coming months.

In the central projection, conditioned on market yields that are somewhat higher than in November, inflation is expected to increase to 2.8% in the first half of 2018, before falling back gradually to 2.4% in three years’ time. Inflation is judged likely to return to close to the target over the subsequent year.

Measures of inflation compensation derived from financial markets have stabilised at around average historical levels, having increased during late 2016 as concerns about a period of unusually low inflation faded.

Jeremy Duncombe, director of Legal & General Mortgage Club, said: “Today’s decision to maintain the base rate at 0.25% will provide reassurance to the mortgage market. Continuity is exactly what our housing market needs in 2017 as the UK gears up to leave the EU by triggering Article 50.

“Borrowers who haven’t yet taken advantage of the current low rates must act now to take advantage of this opportunity to save themselves a significant sum of money by remortgaging. By proactively getting in contact with a mortgage broker, borrowers will get the support they need to help them navigate the available mortgage options and find a remortgage deal that is suited to their needs.”