Bank of England policymakers will take a crucial vote this week on whether to pump more money into Britain's stagnant economy as it weighs weak growth against high inflation.
The bank's monetary policy committee will take its monthly vote on Thursday and while it is likely to leave interest rates on hold at 0.5 per cent, economists believe there is a strong possibility it will increase its quantitative easing program by £25 billion ($37 billion), taking it to a total of £400 billion.
The voting pattern at the committee's February meeting suggested it was moving closer to more monetary stimulus for Britain, with three members of the nine-strong committee backing a £25 billion increase in the bond-buying program.
Crucially, one of the three voting in favour of more easing was the bank's governor Sir Mervyn King.
In the past it has usually followed that fellow members of the committee vote in the same way at subsequent meetings.
Scotiabank economist Alan Clarke said an expansion of quantitative easing was "more likely than not" at the March meeting.
"The recent noises from MPC members suggest [they] want to do something, but it is not yet clear what," Mr Clarke said. "The default policy tool has tended to be more QE and a £25 billion expansion at this week's meeting seems to be the most likely outcome."
The case for stimulus appeared to strengthen last week when data showed the manufacturing sector shrank unexpectedly in February, after two months of growth. Meanwhile, data showed mortgage approvals fell slightly in January, and while there has been evidence the government's Funding for Lending Scheme is having some positive effect on overall lending, credit availability for smaller businesses is still poor. Mr Clarke said new figures to be published this week were likely to show that take-up of the scheme continues to be "muted".
Inflation remains above the 2 per cent target at 2.7 per cent, and the bank has forecast it is likely to remain above target for two years.
However, the MPC has signalled it is willing to look beyond the target and provide more stimulus should it be justified by a weak backdrop for growth.