By William Schomberg
LONDON (Reuters) - Mark Carney, who has spent much of his time in charge of the Bank of England trying to signal what the central bank is planning, will probably say next week that he doesn't know what its next move will be.
Carney and his fellow policymakers are likely to stick to their neutral stance on whether to cut or raise interest rates in future, due to the scale of uncertainty about the impact of last year's referendum decision to leave the European Union.
Economically, Britain has so far coped much better than expected with the shock vote. It was probably the world's fastest-growing big advanced economy in 2016, confounding forecasts from the BoE and almost everyone else of a swift Brexit hit.
Most economists in a Reuters poll published this week said the Bank will raise its economic growth forecast for 2017 for the second consecutive time on Feb. 2, when it is due to deliver its latest thinking on the economy.
HSBC economist Liz Martins expects the Bank to say the economy will grow by 1.7 percent this year, up from November's forecast of 1.4 percent and more than double the 0.8 percent it expected in August, when concerns about a Brexit slump were their strongest.
Combined with inflation that looks set to shoot above the Bank's 2 percent target soon and an 11-year low jobless rate, an upgrade like that would normally suggest the BoE ought to be turning its mind to raising its record-low interest rates.
But top Bank officials have said they are bracing for a "slow-motion slowdown" as the Brexit vote eats into the value of sterling and the spending power of consumers.
Prime Minister Theresa May's speech earlier this month, signalling a potentially disruptive "hard Brexit" from the EU and its single market, may add to the cautious approach of Carney and his colleagues.
RATE HIKE OR RATE CUT?
Some economists say a creeping Brexit effect on the economy will prompt the BoE to cut rates over the next year. That is the opposite expectation to many investors who are pricing in a 50-50 chance of a rate hike by the end of 2017.
"The market is desperate to get a hawkish signal," said Ross Walker, an economist with bank RBS (LON:RBS). "But I think the Bank will be unwilling to move in either direction for the next six months or this year."
Sitting on the fence about whether to cut rates or raise them represents something of a novelty for the BoE since Carney took over as governor in 2013.
He sought to show investors that super-low rates would not rise for a long time. But his forward guidance policy struggled to cope with unexpected twists and turns of the economy.
On top of the uncertainty about Brexit, it is far from clear what the election of U.S. President Donald Trump, and his calls to get a better deal for the United States in trade deals, means for the world economy.
All of which suggests that the Bank next week will stick closely to the neutral stance it adopted in November.
Economists take it as a given that it will keep rates at 0.25 percent on Thursday and announce no new extension of its bond-buying programme.
"Expectations for next week's 'Super Thursday' are pretty low," analysts at Nomura said in a note to clients, referring to the combined announcement of the Bank's rate decision and publication of minutes of its meeting and its Inflation Report. "We may have to re-name it 'Average Thursday' for a while."