Workers will receive a 3.5pc pay rise and a one-off 1pc salary boost this year in a deal agreed by the Unite union.
The lowest paid staff will receive the largest increases, in order to shield them better against the cost of living crisis, while senior staff will only see their pay packets increase by 1pc.
Andrew Bailey, the governor of the Bank, declined a pay rise, keeping his compensation at around £598,000.
The deal comes after Mr Bailey warned of the risk of a wage-price spiral which would fuel further inflation as companies are forced to raise prices further.
Last year, the governor called on workers to agree to "moderation" in their pay packages, although he admitted such moves would be "painful" for many.
The Unite union, which has 600 members at the Bank, has accepted the pay deal. It means Threadneedle Street will avoid risking a walkout by staff at a time when workers across the public and private sector have downed tools in protest against pay deals.
The pay offer, which will be worth 4.5pc to some of the bank's lowest paid staff, is still less than half the current rate of inflation. The consumer price index was around 10.5pc in December, well above the bank's 2pc target.
The deal with unions for a sub-inflation pay rise comes amid wider discontent among civil servants.
Members of the Public and Commercial Services Union, which represents 100,000 workers including Department of Work and Pensions staff, have called for strikes on February 1 unless ministers agree to a 10pc pay increase. Staff at HMRC are being balloted over possible strike action.
A Bank spokesman said: “We need to strike a balance between maintaining budgetary discipline with public funds, retaining critical skills, and addressing the cost of living pressures facing our staff. For next year, we have agreed a 3.5pc pay award budget targeted towards staff lower in their pay scales, and a one-year only non-pensionable benefits uplift worth 1pc.”