The Bank of England is almost universally expected to hold interest rates stable when the monetary policy committee (MPC) announces its latest decision tomorrow.

Meeting yesterday and today the MPC is discussing the future direction of the base rate of interest in the UK economy, which presently stands at five per cent.

The Bank’s hands are largely tied by rising inflation – which presently stands at 4.4 per cent on the government’s consumer price index (CPI) measure. This is well ahead of the target of two per cent, making any cuts in the rate unlikely.

“Our expectation is there will be no movement in interest rates,” commented a spokesperson for the Council of Mortgage Lenders (CML).

“We think the bank clearly has a difficult set of priorities to look at in terms of continuing inflationary pressures in the economy and the likelihood that there may be a more significant economic downturn.

“Until it is clearer that we are over the spike in inflation we don’t expect the bank to be able to move to ease interest rates.

However, with house prices falling sharply, the National Association of Estate Agents (NAEA) and other industry bodies have been demanding a cut.

“We believe a reduction in interest rates this week will provide a pivotal way for the government to help revitalise the current market place,” commented Peter Bolton King of the National Association of Estate Agents (NAEA).

“Indeed, a cut in rates would play a major part in helping to stimulate consumer confidence at a time where individuals’ self-assurance has taken a heavy hit.”

Yet, this appears unlikely.

Jonathan Loynes, chief European economist, at Capital Economics said: “No change.

“The MPC is still trying to strike a difficult balance between weakening activity on the one hand, at the same time worrying about high inflation.”

Commentators at Lloyds TSB, Royal Bank of Scotland (RBS), Halifax, and the British Retail Consortium also all predict no change in rates.

“No change. Although the economy is clearly slowing, the inflationary pressures remain and while we think the next move to the interest rates will be down, we think the bank will definitely be cautious about moving too early,” concluded Graeme Leach, chief economist at the Institute of Directors (IoD).