The Bank of England is poised to keep borrowing costs unchanged for the tenth month running when it concludes its rate-setting meeting today. All 35 forecasters polled by AFX News expect the nine-member Monetary Policy Committee to leave the key repo rate at 4.50 pct. All of them expect the MPC to keep rates on hold in July too. But by August, a number of them think there will be enough for the rate-setting body to hang a rate hike on. This is a substantial turnaround from the situation just a month ago, when the bulk of economists were predicting unchanged rates for 2006 as a whole. Before last month's meeting, nine of the 34 economists polled by AFX News were predicting at least one rate cut in 2006. Now there is only one, and he isn't too confident about his call. Neil Mellor at the Bank of New York reckons the market has got ahead of itself in pricing in rate hikes at a time when the consumer faces "considerable headwinds", most notably from a stalling housing market. Mellor thinks there is a 40 pct chance that his call of a rate cut this year will not happen. Sixteen of the 35 though think rates will go up, with one of them predicting two quarter point hikes, which would take the repo rate up to 5.00 pct for the first time since before the terrorist attacks in New York and Washington in September 2001. "I think we're going to find more inflation in the system and find the economy picking up more momentum, and that makes two rate rises appropriate," said Richard Jeffrey, economist at Bridgewell Securities. Last month, only seven of the economists polled were predicting higher rates. James Knightley, economist at ING Barings, has altered his call more than anyone else. Instead of predicting rates at 4.00 pct at the year end, Knightley now reckons there will be one quarter point hike, even though he doesn't think there is a need for one, especially if a slowing US economy hits UK growth. "The change of view is based on the BoE forecasts and more hawkish rhetoric," he said. In last month's Inflation Report, the BoE said its central view is that CPI inflation will be persistently above the 2.00 pct target for three years if base rates remain at 4.50 pct. That fuelled expectations that the MPC was gearing up for a rate hike some time this year. The minutes to the May meeting, published after the Inflation Report, reinforced that view. They showed that six MPC members voted to keep the key repo rate unchanged at 4.50 pct, but that David Walton voted for an immediate quarter point hike and Steve Nickell, in his final meeting, called for a quarter point reduction. It was the first three-way split since August 1998 and also only the third such occasion since the bank was granted its independence in 1997. Analysts said the departure of Nickell, who has voted for a cut on six consecutive occasions, means there is a now tightening bias developing on the MPC. Today's meeting marks David Blanchflower's first and the market will be interested to see how he votes when the minutes are published on June 21. "This is likely to leave the Committee marginally more hawkish in composition," said David Page, economist at Investec Securities, who on balance thinks rates will rise to 4.75 pct in August.