The Bank of England is expected to keep interest rates unchanged at 0.5% this week, but the meeting will be watched closely amid expectations over another hike in May.
Governor Mark Carney has already warned borrowers that rates will need to rise “somewhat earlier and by a somewhat greater degree” to get inflation back on target after stronger-than-expected growth in the economy.
Experts believe the comments last month paved the way for another quarter point rate rise as soon as May, with one more due by the end of the year, and another in 2019, which would see rates climb to 1.25%.
The Monetary Policy Committee (MPC) is set to sit tight in Thursday’s noon decision, but could make the next move alongside the next set of quarterly inflation forecasts in May, according to economists.
Investec economist Philip Shaw said that some of the nine policymakers on the MPC may even call for an immediate 0.25% rise.
“Although the MPC will most likely stand pat next week, we would not be surprised to see some dissent on rates, with one, or even perhaps two, members backing an immediate 25 basis point hike in the Bank rate,” he said.
Likely candidates are Ian McCafferty, Michael Saunders or Andy Haldane, according to Mr Shaw.
“This should smooth the way for the committee to make a move on rates in May, as long as this is still warranted by the economic data,” he said.
Official inflation figures are also out this week and Investec predicts they could see the Consumer Prices Index dip to 2.7% in February from 3% in January.
But Mr Shaw said this would be unlikely to dent the MPC’s view that more rate hikes are needed.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, is pencilling in an easing of inflation to 2.8% off the back of falling oil prices.
He said: “The fall in oil prices to 65 US dollars, from 70 US dollars in early February, has increased the chances that inflation undershoots the MPC’s forecast over the coming months.”
However, the meeting comes amid signs that the economy is struggling to pick up pace.