Bank set to hold rates

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Most analysts expect the central bank's Monetary Policy Committee will keep borrowing costs pegged at 4.75 percent for the second month on Thursday but then raise them to 5.0 percent in November in order to keep price pressures down.

New figures on Wednesday showing house prices jumped another one percent last month and the service sector grew faster than expected only increased nervousness about another surprise move.

Futures markets are pricing in a one in three chance of rates moving up a quarter point when the MPC back to full nine member strength for the first time since March delivers its verdict at 12:00 p.m. on Thursday.

"An interest rate hike cannot be completely ruled out this Thursday, although we think it is more likely that the Bank will act in November," said Howard Archer, economist at Global Insight.

But market jitters over an early move aside, many economists are less confident the central bank will raise interest rates next month on growing worries the giant U.S. economy is turning down, which could hurt Britain and the rest of the world.

Euro zone economic growth has also probably peaked and the European Central Bank looks nearly certain to raise interest rates 45 minutes after Thursday's BoE decision.

"We are now less confident that base rates will rise again in November to 5.0 percent. Although this remains our central view, we think it is becoming a closer call," said Philip Shaw, chief economist at Investec.

DIVIDED THEY HOLD

Sure, BoE deputy governor John Gieve said last week that he even considered voting for a rise last month but fellow MPC member David Blanchflower appeared more concerned the economy was slowing down.

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