The Bank of England has voted to keep interest rates at 16-year highs, in line with market expectations.
BoE's Monetary Policy Committee voted seven to two in favour of keeping borrowing rates at 5.25%, marking the sixth consecutive meeting in which it has been maintained.
One person joined the committee's most dovish member Swati Dhingra in calling for a cut, a positive sign for the market said analysts.
In response to the decision, the FTSE 100 rose 30 points to around 8,384.
Governor Andrew Bailey offered an optimistic comment alongside the announcement, likely contributing to the FTSE 100's sharp jump.
He said: "We’ve had encouraging news on inflation and we think it will fall close to our 2pc target in the next couple of months.
"We need to see more evidence that inflation will stay low before we can cut interest rates."
"I’m optimistic that things are moving in the right direction."
Investors now believe the first interest rate cut will come in June, with money markets indicating a 50% chance of a drop in borrowing costs next month.
Should this fail to happen, the markets are pricing in an August rate cut.
Jeremy Batstone-Carr at Raymond James said: "Since the Monetary Policy Committee’s (MPC) last meeting, headline and core inflation have dipped, with the descending trend expected to continue.
"Ahead of June 20th, April’s CPI data on May 22nd is expected to show that price increases have fallen sharply, laying the ground for rate cuts the following month.
"Although the labour market has shown signs of loosening, providing additional encouragement to the MPC, the possible inflationary consequences of a rate cut remain concerning to some the rate-setters.
"The Committee thus remains divided on the road ahead, with some finding that the pace of deflation is still too slow for comfort.”