Interest expected to stay at 0.5%

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As well as keeping the Bank rate at a record low of 0.5%, the BoE is unlikely to announce any change on Thursday to its quantitative easing programme, under which it is creating £75 billion in new money to inject into the economy.

Experts believe that policymakers will be reluctant to cut rates again due to the negative impact on banks' margins and their willingness to lend.

It is possible that rates will remain at 0.5% for the rest of the year, with monetary policy focused on the quantitative easing started last month.

Howard Archer, chief UK economist at Global Insight, said: "We suspect that interest rates are set to stay at 0.5% well into 2010 as we believe that GDP will contract through this year before the economy stabilises in early 2010."

While official borrowing costs have fallen for six months in a row, the Bank believes rate cuts alone will not be enough. Under QE, the Bank is creating £75 billion in new money, with a further £75 billion available if necessary. Whether QE will work, however, depends on the extent to which struggling banks pass on the extra funds created by the Bank of England.

Mr Archer added: "Quantitative easing is clearly now at the forefront of the Bank's attempts to stimulate economic recovery, not only because the Bank rate is unlikely to come down further but also because the lack of availability of credit remains a major concern."

It is unlikely members of the Bank's monetary policy committee (MPC) will be too alarmed by last month's surprise rise in CPI inflation to 3.2%, more than one percentage point above target.

Governor Mervyn King said the increase was likely to be short-lived, with CPI expected to move below its target over the next year. He will also be wary of reading too much into a rare of run of better economic news.

In the housing market, mortgage approvals rose from 32,000 to 38,000 in February, while the Nationwide measure of house prices rose by 0.9% in March, the first monthly rise in that index in over a year. There were also figures showing a slowdown in the pace of decline in the manufacturing sector.