Lower immigration and weaker business investment would also weigh on the economy
The Bank of England kept interest rates steady on Thursday, saying signs that Britain's economy had picked up since December's election, and of a stabler global economy, meant more stimulus was not needed now.
Financial markets had seen a 50 percent chance of a cut but the Monetary Policy Committee split once again 7-2 in favor of keeping Bank Rate at 0.75 percent with external members Michael Saunders and Jonathan Haskel again voting to lower rates.
Economists polled by Reuters had on average expected one more policymaker to vote for a cut.
The central bank kept the door open for a move after Governor Mark Carney hands over to his successor, Andrew Bailey, in March.
"Policy may need to reinforce the expected recovery in UK GDP growth should the more positive signals from recent indicators of global and domestic activity not be sustained or should indicators of domestic prices remain relatively weak," the BoE said in its quarterly Monetary Policy Report.
But if growth picked up as suggested by upbeat business surveys since Prime Minister Boris Johnson's unexpectedly emphatic Dec. 12 election win, "some modest tightening" of policy might be needed further ahead, the BoE said.
The central bank no longer specified that such tightening would be "limited and gradual", a long-standing piece of BoE guidance that dated back to a time when a more rapid pace of interest rate increases might have looked likely.
The central bank estimated Britain's economy did not grow at all in the final three months of 2019, a time of political uncertainty when parliament forced a delay to Brexit and a snap election raised the prospect of a change in government.
This will have a knock-on effect on economic growth for 2020, which the BoE forecasts will be just 0.8 percent for the year as a whole, the slowest since the financial crisis.
Growth is seen recovering over the year, however, reaching an annual rate of 1.2 percent by the final quarter of 2020.
Johnson's victory means Britain will formally leave the EU at 2300 GMT on Friday, starting an 11-month transition period during which Britain needs to negotiate a longer-term trade deal with the EU or face tariffs on its exports from 2021.
Even if this deal is reached, the BoE said it now penciled in increased trade frictions from the start of 2021, contributing to a reduction in its estimates of Britain's long-term growth potential.
Lower immigration and weaker business investment would also weigh on the economy, it added.
Investors who expect a BoE rate cut soon may also be encouraged by the central bank's subdued inflation forecast.
Inflation is seen staying below the BoE's 2 percent target over the next three years if rates stay at 0.75 percent. BoE forecasts based on market expectations of a cut in rates to 0.5 percent this year show inflation rising slightly above target.