The Bank of England's Monetary Policy Committee (MPC) has kept UK interest rates on hold at a record low of 0.5%.Economists had expected no move in rates because the latest data has shown the UK economic recovery remains weak. The committee's decision comes despite the annual rate of inflation remaining at 4.5% in May, well above the Bank's 2% target. The Bank also kept its programme of quantitative easing unchanged at £200bn.The MPC is split over which is the greater problem, the weak economy, which recent data suggests has slowed from the 0.5% growth of the first quarter, or inflation, which is squeezing consumers' purchasing power.

The National Institute for Economic and Social Research's latest forecast suggests the UK economy barely grew in the second quarter of year.It predicts growth of 0.1%, below other recent estimates which predict a rise of 0.3%. The first official estimate for second quarter gross domestic product (GDP) will come on 26 July.

Some members of the committee would like interest rates to rise, to head off the risk of inflation accelerating. Savers would also like to see rates go up. One lobby group, Save our Savers, says that the value of UK savings has been eroded by £50bn in the past year because of inflation and low interest rates.