All 60 economists in a Reuters poll reckon the central bank will keep borrowing costs at 0.5 percent for the 18th month running when the Monetary Policy Committee concludes its two-day meeting on Thursday and most see no move up until early 2011.
Indeed, some analysts reckon the central bank may even at some point have to expand its 200 billion pound quantitative easing scheme due to concerns about the strength of recovery.
Britain's economy grew a robust 1.2 percent in the three months to June, but private sector surveys and some official data are already pointing to a slowdown in the third quarter of this year to an estimated 0.3 to 0.5 percent. "The majority of MPC members remain concerned about the strength of the recovery, and in the near term the balance of risks around unchanged policy is that QE is extended," said Simon Hayes, economist at Barclays Capital.
"However, we do not believe such a move will take place this week, and our central expectation remains that policy will be on hold for the rest of the year."
Sharp government spending cuts pose the biggest risk to recovery in the near-term. Most departments face having their budgets slashed by a quarter over the next four years, potentially putting hundreds of thousands of people out of work. Taxes, meanwhile, are set to go up and credit conditions remain tight.
Bank Deputy Governor Charlie Bean said last month that policymakers in advanced economies may still need to provide further support to prop a fragile global recovery.
The central bank's quarterly forecasts last month have left the door open for more monetary easing, envisaging a lower growth outlook and inflation falling well below its 2 percent target in two years.
For now, however, inflation remains well above 2 percent and rising food prices could hamper any near-term slowdown, which may dissuade Bank from loosening monetary conditions for the time being.
Andrew Sentance -- who for the last three months has voted to raise interest rates because of his concerns about price pressures -- will probably do so again in September, although he is likely to be the sole dissenter on the 9-member committee.
"We suspect that the other eight MPC members will conclude that the serious headwinds facing what is still overall a muted recovery from a very deep recession warrant unchanged rates," said Howard Archer, economist at IHS Global Insight.
"Indeed, if the MPC does make any adjustments to monetary policy in the near term, it is most likely to be to revive QE."
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