Inflation is running at its fastest pace since the Bank won the power to set interest rates in 1997, a development that would embarrass any inflation-targeting central bank.
The European Central Bank has already raised borrowing costs to counter the global inflation threat and British policymakers, who are required to keep inflation at 2 percent, say they won't be surprised if it spikes above 4 percent this year.
In any other circumstances, rates would be going up but doom-laden economic news has been coming in thick and fast. This has raised fears of the first recession since the early 1990s and persuaded all 72 analysts polled by Reuters that borrowing costs will stay on hold this week.
The housing market is spiralling downwards, stock markets are tumbling, firms are laying off thousands of workers and surveys already indicate the economy is shrinking.
"The UK is heading for a toxic mix whereby CPI inflation heads up to about 5 percent in the next two to three quarters while the economy skirts with - or may well fall into - recession," said Michael Saunders, an economist at Citi.
CALLS FOR CUTS
Business groups have turned up the volume on their routine calls for the Bank's Monetary Policy Committee to lower interest rates, and they have found an ally in the trade union movement.
'We are at a dangerous point when businesses are starting to act like a recession is due,' said Adam Lent, economics spokesman at the Trades Union Congress. 'This behaviour risks creating serious problems no matter what the economic reality.'
