Thursday's announcement will likely show no change to policy stance in March, but the most recent rhetoric among the Bank of England's top policymakers suggests we are slowly getting closer to normalization of monetary policy.
The Bank of England (BoE) rate-setter Kristin Forbes used in her speech last week an allegory of King Midas' golden touch to describe risks to a prolonged period of ultra-low interest rates.
In Greek mythology, King Midas was enjoying his extraordinary power of turning everything he touched into gold until he realized the detrimental consequences after his daughter turned into a lifeless statue and food became inedible.
Major economies have been enjoying their own version of King Midas' golden touch in the last six years in form of record low interest rates and massive volumes of quantitative easing - the tools that helped avoid the worst after one of the most devastating and destabilizing financial crisis in modern history. But such policies bear risks if applied for longer than necessary, Forbes argued.
The latest set of business surveys showed the UK economy remains strong and growth is expected pick up again in 2015 after a slight slow-down in the final months of the last year. Inflation remains record low but the primary downward pressure, which is cheap Oil, is only temporary and will drop of the statistics at the end of this year.
On the domestic price front, the BoE policymakers will wait until spring to see how low near-term inflation affects wage settlements. Speaking in Westminster on February 24, the BoE Governor Mark Carney warned UK employers not to use the current record-low inflation as an excuse for lower wage settlements.
If the current weak price pressures do not translate into depressed wage growth this year, and inflation expectations remain well anchored, the voting rift at the BoE's Monetary Policy Committee (MPC) will most probably come to life again soon.
Despite the current unity on policy decision at the MPC, some policymakers continue to voice their concerns about upside risks to medium-term inflation outlook.
In her King Midas speech, Forbes said "there are costs and risks from keeping interest rates at emergency levels for a sustained period, especially as an economy returns to more normal functioning."
"The primary reasons for low inflation today are external factors that will fade quickly … These factors will restrain headline inflation throughout this year, but then quickly drop out. Even the more lagged effects of sterling's appreciation will likely peak in the first part of this year and also gradually fade. Inflation will then, most likely, bounce back," Forbes warned and explained that "since interest rates take well over a year to be fully effective, they should be adjusted to respond to inflationary risks at that time horizon - rather than respond to today’s inflation."
In an op-ed he wrote for the Observer on February 15, the external member of the BoE rate-setting committee Martin Weale said that in his view, "rates will also have to rise somewhat earlier than market participants currently expect."
Weale, together with MPC member Ian McCafferty, voted for a rate hike from August through December last year, but they both dropped their votes in January due to their concern that "the expectations of low inflation might become built in" as oil prices continued to sink. But Weale also said he still saw the risks of higher inflation to come sooner than the MPC's central view suggests.
Policymaker McCafferty said recently that despite low inflation today, the BoE is more likely to tighten policy in the future rather than loosen it, as risks to medium-term inflation outlook loomed on the upside.
The latest BoE forecast showed low near-term inflation is to persist for the rest of this year on cheap oil, before bouncing back at the turn of the year. The medium-term inflation outlook, however, is expected to overshoot the 2% target as soon as in the second half of 2017 if interest rates remain at a record low for as long as the markets currently expect.
Crude oil prices hit the bottom in January and are picking up again while wage growth is seen rising well above inflation this year allowing for higher real incomes and stronger consumers' spending. In light of those events, even Governor Carney turned hawkish for a minute to wake markets up when he said during the February Inflation Report press conference that, despite the current low inflation, "the headlines today mask stronger underlying dynamics which will determine UK output and inflation tomorrow."
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