Inflation clues sought in Bank report

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The forecast comes amid a potent economic mix of slowing growth and rising inflation.

Figures on Tuesday revealed that inflation remained above target for the fourth month in a row, hitting 2.2% in January - its highest in seven months.

The Consumer Prices Index (CPI) is also set to soar higher as it emerged that all of the recent energy price hikes would impact on February's inflation figures.

Today's report is expected to give a sobering picture of CPI based on the market's assumption for interest rates.

Dramatic rate reductions by the US Federal Reserve last month sparked hopes of similar action on this side of the Atlantic.

The market is said to have pencilled in another four cuts in the UK, to 4.25%, by the end of the year.

However, the outlook for inflation in the UK will tie the Bank's hands, said experts.

Howard Archer, chief economist at Global Insight, said inflationary pressures would prevent the Bank from cutting rates again until May, although he added that rates would still fall to 4.5% by the end of the year as the economy slowed.

The report is likely to confirm the difficult task faced by the Bank as it seeks to balance growth and return CPI back to the Government's 2% target.