The Bank of England has warned Brexit uncertainty is set to see growth slump to its lowest level for 10 years in 2019, as it held interest rates at 0.75 per cent.

The bank slashed this year's growth forecast to 1.2 per cent - the lowest since 2009, when the economy contracted by 4.2 per cent at the height of the recession following the financial crisis.

Its shock downgrade compares with 1.7 per cent predicted in November, while the bank also cut its outlook for 2020 to 1.5 per cent.

The gloomy growth outlook came as policymakers on the nine-strong Monetary Policy Committee (MPC) voted unanimously to keep rates unchanged.

The bank's quarterly inflation report also signalled rates may not rise until the second half of 2020 as Brexit worries have seen businesses freeze spending, while it warned consumer confidence had "weakened significantly".

Sterling tumbled on the news and was trading 0.6 per cent down versus the US dollar at 1.285.

Against the euro, the pound was down 0.3 per cent at 1.134.