The move came amid signs that the recession may not be as prolonged as some commentators feared.
While GDP shrank by 1.9% in the first quarter of the year, stock markets have surged over the past few weeks as confidence returns to the banking sector after months of gloom.
The rate freeze follows bullish first-quarter results from Barclays, which recorded a 15% increase in year-on-year profits to £1.37bn.
However, many businesses are still finding it difficult to get credit despite the low interest rates and recovery in the banking sector.
Analysts widely believe, however, that recovery in the economy will not come until the fourth quarter of 2009 at the earliest, with the economy as a whole contracting between 4-5% this year.
Bank of England holds rates at 0.5%
Interest rates have been held at the record low of 0.5% in a widely expected move that reflects the continuing strain on the UK economy.
