In a decision economists have referred to as “knife edge” and “finely balanced”, policymakers will have to make a call on whether to turn on the QE tap, or use alternative stimuli to prop up the floundering economy.

Traders have reacted by selling sterling, with the pound falling through $1.50 against the dollar briefly to a new multi-year low of $1.4967.

By 09:20am it was marginally above $1.50, trading at $1.5004.

Bets against sterling are building following a tight decision by the Monetary Policy Commitee (MPC) last month. The minutes of the last meeting showed Bank Governor Mervyn King voted in favour of more QE, in a move which surprised many commentators.

He called for an additional £25bn of stimulus, which would take the total to £400bn.

Mark Allan, senior economist at AXA Investment Managers, said a lot of uncertainty surrounds today’s announcement.

“After Mervyn King surprised the world by unsuccessfully calling for more QE last month, the outcome of the policy meeting seems particularly uncertain. With the MPC decision finely balanced, there will inevitably be some people in the market who are surprised by whatever the MPC decides.”

However, Allan expects the final outcome to be a delay on more QE, and added the Bank may consider other policy options to support the recovery.

“Although the prospect for an interest rate cut looks remote, and the prospect of negative rates even less likely, some new form of public support for bank lending, is vaguely conceivable.

“With the budget due on 20 March, any new co-ordinated action between the Treasury and the Bank has a decent chance of being launched tomorrow; waiting until the budget runs the risk of Osborne being accused of using the Bank for political aims,” he said.

Elsewhere, Bank of America Merrill Lynch analysts Nick Bate, John Wraith and Naeem Wahid said there is a chance of more QE, but agreed it is more likely the Bank will hold fire for now.