The Bank of England is likely to trim its economic growth forecasts today and may shave its inflation outlook, although few people expect the British central bank to signal it is poised for an imminent interest rate move.
Most economists expect the BoE to follow August's quarter point rate cut to 4.5 per cent with another next year, based on disappointing growth since then and a continuing threat that household spending could weaken further.
But many analysts also reckon that forecasts in the bank's November quarterly inflation report today won't look that different from those it drew up three months ago.
Financial markets have already been considering the prospect that rates could rise next year, not fall, so it will take a hawkish set of forecasts to make rate hike expectations climb any further.
But there were signs yesterday that an expected rise in inflation further above the BoE's 2.0 percent target may have already passed. Annual growth in the consumer price index eased in October for the first time in more than a year.
Three months ago the bank predicted in its last report that inflation would be slightly above target at the 2-year horizon and it saw a strong rebound in growth in 2006.
"The medium-term outlook for CPI will depend heavily on the central bank's growth forecasts, which in August looked extremely optimistic to us. We expect these to be revised down," said David Page, economist at Investec in London.
"Today's inflation release should help allay some of the short-term inflation concerns."
This showed cheaper petrol helped to lower annual inflation to 2.3 percent from a record 2.5 percent the month before.
There have been signs recently that the housing market has lurched out of the doldrums following August's rate cut. Other reports have suggested that consumer spending growth, which the BoE has said is the principal risk to the outlook, might have passed its peak.