What the Bank has to weigh up next week

The Bank has already created money to buy more than 100 billion pounds of assets, mainly gilts, and is on track to hit its 125 billion pound target by the end of the month.

Most economists expect the scheme will be extended to 150 billion pounds, the limit authorised by the government earlier this year. But they are split on whether the Bank will take this step this month, or wait until August when it publishes new quarterly forecasts.

Here are some points likely to feature in the Monetary Policy Committee's decisions.

DEPTH OF RECESSION

Britain's economy contracted by a larger than expected 2.4 percent in the first three months of this year, its sharpest quarterly fall since 1958.

Forward-looking indicators have painted a brighter picture. Consumer confidence has picked up, surveys suggest the service sector expanded in both May and June and even the housing market is stabilising.

The National Institute of Economic and Social Research calculates the economy returned to growth in April, reinforcing the view that Britain will be one of the first major economies to emerge from recession.

Bank policymakers, however, have warned that the recovery could be fragile and an inventory-led pick-up may not be sustained if bank lending is too weak to support demand.

INFLATION