The Monetary Policy Committee cut rates from a 16-year high by 0.25% to 5% in August, the first rate cut in four years.

But forecasters say the body will keep a close eye on inflation and wage growth when they meet on Thursday before moving further.

Deutsche Bank senior economist Sanjay Raja expects “a dovish hold, setting the stage for a second quarter-point rate cut in November”.

It points toward a 7-2 vote, with external member Swati Dhingra and deputy governor Dave Ramsden holding out for an immediate reduction.

“There’s a risk that newly minted MPC member Alan Taylor could also start his MPC tenure on a dovish foot, adding a more dovish skew to the vote tally,” Raja adds.

The UK economy showed no growth in July as it had in June, according to flash figures published by the Office for National Statistics earlier this week.

The dominant services sector showed slight growth of 0.1% in the month to July, while production and construction output fell by 0.8% and 0.4%, respectively.

Hargreaves Lansdown head of money and markets Susannah Streeter says: “Even though economic growth is clearly flagging, partly as high interest rates take their toll, policymakers still look set to be wary, and keep rates on hold.

“Although the once red-hot labour market is well on the way to cooling down, with regular pay growth, excluding bonuses, falling to 5.1%, it still might be weeks rather than days before borrowing costs come down.

“The rate of wage increases is still running at more than twice the rate of consumer price growth and there are still niggles of worry that those high wage bills might be passed on as higher prices for goods and services.”

Streeter points out: “Although two interest rate cuts are priced in before the end of the year, it’s looking more likely that they will land in November and December.

“A lot is likely to be riding on August’s consumer price inflation number, due out just a day before the big interest rate decision.’’

General prices ticked up to 2.2% in July, according to the last set of official statistics, from the 2% target it hit in May and June.

The BoE forecasts inflation will hit 2.75% by the end of the year and remain above target all next year, due to fluctuating energy prices and other costs.

Hargreaves Lansdown head of personal finance Sarah Coles says a hold spells both “good and bad news for mortgages”.

Coles says: “The good news is that fixed rate deals are on their way down, because the cuts expected later this year are already priced into these products.

“This time last year the average 2-year fix was 6.66%, whereas now Moneyfacts figures show it’s 5.52%. The average five-year fix has also dropped – from 6.15% to 5.18%.”

But Coles adds: “There’s bad news for those on variable rate mortgages, who could easily have waited for over a year for a cut they had expected to be imminent.

“They now have to wait another month or two to make another inroad into their monthly payment. Their mortgage rate is likely to ease a little by the end of the year, but it’s nothing like the scale of cuts they might have expected when they remortgaged onto a variable deal.”

After Thursday’s decision, Deutsche Bank says the markets will turn toward the impact of Chancellor Rachel Reeves’ 30 Budget may have on rates.

Raja says: “All eyes will turn to the Autumn Budget, and alongside it, any major implications for the November Monetary Policy Report and decision.

“We continue to expect quarterly rate cuts over the next couple of years, before Bank rate settles at 3% around summertime 2026.”