Bank bosses hold summit amid fears of triple dip recession
Policymakers gather for the first interest rates decision of the year this week amid mounting fears that the UK is heading for a triple dip recession.
Members of the Bank of England's nine-strong Monetary Policy Committee (MPC) meet after a gloomy start to 2013 following figures suggesting the dominant services sector contracted in December for the first time in two years.
With manufacturing the only bright spot so far in December after Markit/CIPS survey data also pointed to a poor performance from the construction industry, some experts believe the UK economy slipped into reverse in the fourth quarter.
Markit's survey data points to a 0.2% contraction in the final three months of 2012. The risk that the first quarter of 2013 may not prove much better could see the economy head for a triple dip. The MPC is expected to remain in "wait and see" mode this month and potentially some months to come.
Economists predict interest rates will be held at 0.5% for the foreseeable future, while the Bank is not expected to push the button for more economy-boosting measures under its quantitative easing programme until the path for the economy becomes more certain.
Howard Archer of IHS Global Insight said: "Unless the news on the economy is really dire early on in 2013, we suspect that the MPC will prefer to hold fire given that consumer price inflation could well hit 3% early in 2013 and then stay there for a while."