The Bank of England is widely expected to keep the cost of borrowing on hold this month with economist predicting it will put off cutting rates until later this year.
The Monetary Policy Committee has held interest rates at 4.5% since cutting them in August last year, and inutes from their two most recent meetings have shown just one member voting for a reduction.
Signs of a sustained recovery in the housing market, with both prices and buyer numbers rising, as well as evidence that economic growth picked up during the final quarter of 2005, are also likely to contribute to rates being kept on hold.
But despite agreeing there will be no change this month, most economists are still pencilling in a further rate cut for later on this year, possibly as early as the spring.
The latest snapshot of retail sales and official data for the manufacturing sector are being published early this week ahead of the monthly meeting.
David Page, of Investec, said retail sales in January would be key to judging the strength of the UK consumer.
He expects figures from the British Retail Consortium to show a 1% fall in like-for-like sales during January, compared with a 2.6% rise in December.
Mr Page said the decision on rates was also likely to reflect the MPC’s new longer-term inflation and growth forecasts, which will be published in its latest Quarterly Inflation Report on February 15.
He said: “While we believe that the recent run of stronger high street spending will peter out, a majority of MPC members may differ and we expect official rates to remain on hold at 4.5% next week.
“However we still see a 25 basis point cut during the spring.”
Steve Nickell has been the only member of the MPC to vote for a rate cut during the past two months.
But another member, Kate Barker, has recently hinted she may favour another reduction, saying the recent poor performance of UK manufacturing has made her less confident of the Bank’s November forecasts.
Ross Walker, of the Royal Bank of Scotland, said: “The acceleration in GDP in quarter four, further evidence of recovering consumer demand in the housing market and on the high street, and Stephen Nickell remaining the lone dove in January mean the chances of a rate cut this month are slim.
“One or two additional votes for lower rates are quite possible given mildly dovish comments from Kate Barker and the dovish inclinations of David Walton and Charles Bean, though it is hard to see a majority lining up against the Governor in February.
“If the recent trends of muted wage inflation, deteriorating employment and industrial recession persist, we would expect the current downside monetary policy bias to translate into a cut in base rates – our forecast is for one more 25 basis point reduction in May.”
John Butler, an economist at HSBC, said: “The divisions within the committee centre on how confident they are about an economic recovery this year.
“The key will be whether any member, possibly Ms Barker or Mr Bean, join Mr Nickell in voting for a cut.”