After raising rates by a quarter-point last month, the fifth rise in the past year, policymakers are expected to pause for breath to gauge the impact.

Whatever the outcome of the meeting, many experts believe rates will rise to 6% before the end of the year.

Despite falling back to 2.4% last month, inflation still remains well above the government's 2% target.

Retail slowdown

Back-to-back rate rises are rare, with the Bank of England's Monetary Policy Committee (MPC) generally preferring to assess the effects of previous decisions before taking action again.

The MPC voted 6-3 to raise rates last month.

Since then, figures have shown a slowdown in the manufacturing sector and a decline in house price inflation and mortgage approvals.

There is simply no case for another increase in interest rates this month Kevin Hawkins, British Retail Consortium

High Street sales slowed in June, although the wet weather was a significant factor in this.

While a quarter point rise was not out of the question, one economist said it was unlikely.

"The Bank of England seems well set to leave interest rates unchanged," said Howard Archer, from Global Insight.

"We suspect a majority of the MPC believe that an immediate further rate hike is unadvisable and that the best course of action is for the Bank to hold fire in the near term at least."

Retail groups have urged the Bank to take no action, arguing that previous rises have left many firms in trouble.

"There is simply no case for another increase in interest rates this month," said Kevin Hawkins, director of the British Retail Consortium.

"Retailers need the Bank of England to pause for breath, not pile more pressure onto consumers."