Economists believe the Bank’s Monetary Policy Committee (MPC) will keep rates at 0.25%, despite three out of eight policymakers calling for an increase to 0.5% last month and amid conflicting public pronouncements in recent weeks.
The decision comes a year after the Bank slashed rates to the new all-time low in the aftermath of the Brexit vote.
Prior to June’s inflation reading of 2.6%, there had been growing clamour for a rate rise as a Brexit-fuelled increase in the cost of living ramps up pressure on hard-pressed households.
But while remaining above the Bank’s 2% inflation target, it represented an easing from the previous month’s 2.9%.
This was followed by gross domestic product figures showing growth was limited to 0.3% in the second quarter in what the Office for National Statistics described as a “notable slowdown” for the economy.
Reports since then for the start of the third quarter have been mixed, with manufacturing boosted by the best export order growth for more than seven years, while construction endured a shock slowdown in July.
Howard Archer, chief economic adviser to the EY ITEM Club, said: “The odds now very strongly favour the Bank of England keeping interest rates at 0.25% next Thursday after the August MPC meeting.
“The case for any near-term interest rate hike has been watered down by inflation dipping in June, while UK growth remains stuck in a low gear.”
It is unlikely more rate-setters will join dissenters in voting for a hike, although there have been signs of a growing split on the MPC.
Ian McCafferty, Kristin Forbes and Michael Saunders voted for a rise in June and chief economist Andy Haldane suggested he may support a “prudent” increase this year.
Another MPC member, Gertjan Vlieghe, has insisted that it would be wrong to raise borrowing costs at a time of slowing consumer spending.
Governor Mark Carney has sent conflicting messages, saying both “now is not yet the time” to raise rates and then that a rate hike may “become necessary”.
Ms Forbes also stepped down at the end of last month and her replacement, Silvana Tenreyro, is an unknown quantity.
In its latest report, the National Institute of Economic and Social Research (NIESR) predicted the Bank would raise rates in the first quarter of next year as the economy starts to recover.
But it said the economy would first hit a “trough” this year, with growth of 1.7% before rising to 1.9% next year.
Economists expect the Bank to downgrade its growth forecasts when it releases its quarterly inflation report following a slump in consumer confidence and a string of weak economic data, further diminishing the chances of a hike.
Fabrice Montagne, chief UK and senior European economist at Barclays, said: “We expect the Bank of England to downgrade its forecast in order to reflect disappointing data.
“However, any revision is expected to be minimal, just as in quarter one when the Bank chose not to reflect the full downside surprise in its forecasts.”