Interest rates likely to stay at 5%

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But despite a stagnant economy, interest rates are likely to be held at 5% for the fifth month in a row as inflation concerns linger for the Bank's Monetary Policy Committee (MPC).

The meeting comes after the Government unveiled a raft of measures in an attempt to kickstart the housing market, including a £600 million stamp duty cut.

But the nine-strong committee will be focused on the Consumer Prices Index, which rose to 4.4% in July - more than double the MPC's 2% target - and is set to peak at 5% or more in the coming months.

Although oil prices have fallen back from recent record highs, the UK's "big six" energy companies have all added to the pressure in the past month by hiking gas and electricity bills for the second time this year.

Global Insight's chief UK economist Howard Archer expects rates to be held this time, but then cut later in the year as concerns over the economy deepen.

Most experts are now predicting a technical recession - two successive quarters of economic contraction - in the second half of 2008.

Splits have become more public among the bank's rate-setters in recent weeks as Professor David Blanchflower called for immediate rate cuts and called his committee colleagues "misguided" for their focus on inflation.

He was hitting back at a newspaper article by fellow committee member Tim Besley, who warned that letting inflation get out of control would be "damaging and dangerous to the economy" and herald a return to the 1970s.

JP Morgan economist Allan Monks said: "Though the MPC does not appear ready to reduce rates...we expect the minutes will acknowledge that downside risks to growth are rising, reducing the balance of risks to inflation in the medium term."