The Bank of England cut its growth forecast for Britain on Thursday, saying it expects a "sluggish" economy as household incomes are squeezed by a rise in inflation that followed the Brexit vote.

The central bank cut its annual growth estimate for 2017 to 1.7 percent from 1.9 percent previously, and for 2018 to 1.6 percent from 1.7 percent.

The bank's Monetary Policy Committee also voted 6-2 to keep rates at a record low 0.25 percent amid uncertainty about Britain's economic prospects as it prepares to leave the European Union.

The bank said in a statement Thursday that "GDP growth remains sluggish in the near term as the squeeze on households' real incomes continues to weigh on consumption."

Some economists had called for a rate increase after inflation accelerated to 2.9 percent in May, well above the bank's target of 2 percent. But the rate dipped to 2.6 percent in June, easing pressure for a rise.

The decision came just after a report on Thursday showed Britain's dominant services sector recovered slightly last month. The Markit/CIPS services purchasing managers' index rose to 53.8 points in July, from a four-month low of 53.4 in June.