Interest rate call on knife edge
The Bank of England's interest rate decision is too close to call, analysts have said.
Many analysts are predicting that rates will remain at 5.75% because of concerns about the inflation rate.
However, a growing number, including Barclays, are now betting on a rate cut because economic conditions have deteriorated over the past few weeks.
The Bank has raised interest rates five times since the middle of last year, but left rates on hold since July.
It will announce its decision at midday on Thursday, after a two-day meeting of the Monetary Policy Committee.
The Bank has been keen to keep price growth under control, and may want to see oil and food cost pressures abate before moving to lower interest rates, analysts said.
However, they warned that it also needs to be wary of worsening economic data and conditions.
Surveys this week have shown falling house prices and a slump in consumer confidence, with many observers blaming the Bank's five interest rate increases since the middle of last year.
On Wednesday, Halifax reported that UK house prices dropped 1.1% in November saying that higher borrowing costs and increased mortgage repayment costs were taking their toll.
At the same time, a report from rival lender Nationwide showed that its measure of consumer confidence had seen the biggest monthly decline since the survey began in 2004, sliding by 12 points to 86 last month.
A number of retail and leisure companies have also warned of problems and that they are seeing a slowdown in demand on the High Street.
Many financial industry experts are now warning that tougher times lie ahead because of the continuing impact of problems in the US housing market, which triggered a credit crunch and are rippling out across the globe.
According to Howard Wheeldon of BGC Partners, the challenges facing the UK economy are "serious".
"Not only do the abnormalities of this credit market crisis threaten to destroy corporate growth," he said.
"But unless they are addressed by some radical action on rates, then they risk destroying any prospect of economic growth in 2008." ( BBC )