Interest rates in the UK have again been kept at their record low level of 0.25 percent.
The Bank of England also cut its forecast for growth and wages, saying the impact of Brexit has dampened household spending power.
Mark Carney, the Bank of England Governor, said: “As the Brexit negotiations proceed, the assumption of a smooth transition to a new economic relationship with the EU will be tested.
“If UK households and businesses look through the flurry of headlines then the economy can be expected to pick up from its current period of sluggishness.”
Bank officials also warned that borrowing costs might rise more than what investors expect over the next three years, possibly within a year.
The Bank of England is expecting the economy to grow by 1.7 percent this year, down from its May forecast of 1.9 percent.
After the announcement the pound fell by about half a cent against the US dollar.
The pound also fell nearly one percent to a nine-month low against the euro.
The Bank of England voted by 6-2 to keep interest rates at their all-time low.