What the Bank has to weigh up next week

Inflation remains above the Bank's 2 percent target and has proved surprisingly sticky, largely because the pound's fall over the past two years has pushed up import prices.

Consumer price inflation moderated to 2.2 percent in May and retail price inflation -- a broader measure which includes more housing costs -- has turned negative.

Most economists expect both measures of inflation to fall further in the coming months as the recession erodes pricing power, and the Bank's May inflation report concluded there was a good chance it would undershoot the target in two years' time.

Nevertheless, a near-doubling in oil prices since the start of the year means the threat of deflation has largely gone.

CREDIT CONDITIONS

The Bank's latest credit conditions survey suggested government initiatives to boost lending had enjoyed some success.

Secured credit to households increased in the second quarter for the first time since the third quarter of 2007 and conditions looked set to loosen further in the next few months.

The Bank's policymakers appear to be happy with the way QE is progressing, but there is limited hard evidence that the extra funds being pumped into the system are finding their way to households and businesses.

ASSET PRICES

Equity prices have moved sideways over the past few weeks after a strong rally since March.