No change expected to interest rate
The Bank of England is expected to leave interest rates unchanged as it weighs the impact of its programme to kickstart the economy with injections of new money.
Rate-setters have slashed borrowing costs to a record low of 0.5% and have embarked on plans to boost the economy with £75 billion in newly-created money.
But the Monetary Policy Committee froze rates last month and is now likely to keep them on hold as the measures take effect on the UK's recession-hit economy.
It is possible that rates will remain at 0.5% for the rest of the year, with monetary policy focused on the quantitative easing that was started in March.
JP Morgan economist Allan Monks said he expected the MPC would vote to leave rates as they were and finish off the initial phase of its programme of quantitative easing (QE) - effectively printing money by purchasing certain assets.
"We then expect a pause from the MPC while it assesses the impact of its actions to date," he said. "Our bias has been towards further purchases later in the year (we currently have an additional £25 billion pencilled in for November)."
With further cuts unlikely due to the potential impact on banks' margins and their willingness to lend, the focus will shift to the pace of QE.
The Bank of England - which has permission from Chancellor Alistair Darling to create up to £150 billion if necessary - has spent just over £50 billion so far. It will review the scale of the operation each month.
The Bank's latest trends in a lending survey, however, revealed a mixed picture when it was released at the end of April. Major lenders reported only a limited improvement in mortgage supply since the beginning of the year, but some indicated a willingness to make more credit available to businesses and individuals.
Since their last meeting, the UK economy was shown to have plunged further into recession, with a shock 1.9% dive in output during the first three months of 2009. But recent surveys from manufacturing, services and construction sectors have appeared to suggest that the speed of the UK's slump has slackened.
