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Bank of England governor Andrew Bailey said the interest-rate setting committee expected to be able to cut rates further "but we will have to judge meeting by meeting, how far and how fast".

Federal Reserve chairman Jerome Powell told Congress on Tuesday that the bank was in little hurry to cut rates further.

With limited room for fiscal stimulus, economists expect the central bank to cut rates further by 0.5% –1% to support growth, according to various estimates.

But he added: "We can't commit to when or by how much we will cut rates in the coming year."

By raising rates now the bank is not only trying to keep on top of inflation but will also have more scope to cut rates in the future if it needs to boost the economy.