With consumer prices inflation at 1.6pc, its lowest level since 2009, the Bank should be able to keep rates low while a nascent recovery in business investment becomes more entrenched.
Against this, there are fears that inflationary pressures are being stoked by rising house prices, falling unemployment and a economy which the IMF, OECD and European Commission believe will make Britain one of the fastest growing advanced economies this year.
“If you can’t hike with double digit house price inflation … and strong labour data, when can you?” said Alan Clarke, head of fixed income at Scotiabank.
The Bank, which has forecast for gross domestic product growth for 2014 of 3.4pc, is expected to present a set of broadly unchanged forecasts for inflation and growth.
The central bank has moved away from its focus on a single 7pc unemployment rate threshold to a wide range of indicators to assess how much spare capacity there is in the economy.
Mark Carney, the Governor of the Bank of England, will deliver the Inflation Report at 10.30am.
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