Bank of England expected to keep interest rates on hold at 0.25%

The Bank of England is expected to keep interest rates on hold. Credit: Anthony Devlin / PA Wire

Interest rates are expected to be kept on hold on Thursday by the Bank of England following better-than-expected economic growth in the months since the EU referendum.

Economists predict the Bank's Monetary Policy Committee (MPC) will hold rates at 0.25% - having been slashed to a record low in August as part of a post-Brexit stimulus package worth up to £170 billion.

While MPC minutes from the Bank's September meeting suggested another cut was on the cards later this year, third-quarter gross domestic product (GDP) growth may have quashed plans for further easing.

Bank of England governor Mark Carney has said inflation is likely to rise. Credit: Matt Dunham / PA Wire

Consensus estimates were for GDP growth of 0.3%, while the Bank had expected a rise of between 0.2% and 0.3%.

The Bank's latest forecasts are due to be published in its quarterly inflation report, which will be released alongside its interest rate decision, and will be scoured for signs that fears of recession have been put to rest.

Given the latest figures, the Bank is likely to revise up its GDP growth forecasts for both 2016 and 2017, and nudge up inflation expectations after consumer prices jumped 1% in September amid rising clothes and fuel costs.

The Bank is currently pencilling in a rise to around its 2% target during the first half of 2017.

However, the weak pound is widely expected to drive up import costs and eventually feed through to consumer prices, following a near 20% fall against the US dollar and 15% drop against the euro since the Brexit vote in June.

There are also still concerns that the UK could be hit by a slowdown in private investment.