The Bank of England will keep interest rates at record lows and its asset buying programme unchanged after its policy meeting on Thursday, holding fire on further stimulus for a fragile economy while it assesses the impact of existing measures.

The Bank, which only a few months ago looked close to raising interest rates from their trough of 0.5 percent, extended its 200 billion pound quantitative easing in October, announcing plans to buy 75 billion pounds of gilts over four months.

With risks of a renewed recession rising and the euro zone crisis raging on, many observers expect the Bank to pump more money into the economy eventually to fight the danger of a deep slump coupled with falling prices.

The economy grew 0.5 percent in the third quarter but the dominant services sector slowed in October and manufacturing contracted at its fastest pace in more than two years.

But despite the grim outlook, only one of 24 economists polled by Reuters on Monday expected the Bank to increase the pool of freshly minted money as soon as this week.

Having already implemented a new round of asset purchases in October, there is little prospect of policy changes, said Peter Dixon, UK economist at Commerzbank, who said the bank will eventually spend a total of 350 billion pounds on the programme.

Despite inflation reaching 5.2 percent in September, considerably more than double the central bank's two percent target, a slew of weak data and a raging debt crisis in the euro zone last month persuaded policymakers to agree the new stimulus move.

The European Central Bank cut interest rates by a surprise 25 basis points last week to 1.25 percent to try to boost euro zone growth, but some economists still predict a recession in Britain's main trading partner.

Of 62 economists polled by Reuters, none expected the Bank to follow suit with its own rate cut.

Bank governor Mervyn King said after the October decision the worsening outlook for the global economy had made further easing necessary in Britain as the country was mired in the worst financial crisis since the Great Depression of the 1930s.

Policymakers Paul Fisher and Martin Weale warned that the economy may contract in the final quarter of 2011, highlighting the risk of a renewed recession.


The onus to boost the economy remains on the central bank because the government's hands are tied by its pledge to erase a budget deficit of some 10 percent of gross domestic product.

But the government is increasingly under pressure to take steps to boost growth, and the opposition parties as well as a number of economists have urged Chancellor George Osborne to ease its austerity programme.

The Bank announce its decision on rates at noon on Thursday. Usually it does not provide more details if policy is unchanged.

It also publishes its quarterly inflation report on November 16, which will see growth and inflation forecasts revised down from August and may pave the way for more stimulus later.

The MPC may quite reasonably conclude that significantly larger QE will be needed, said Michael Saunders at Citi. If so, it does not definitely follow that the MPC would expand QE at the November meeting.

So far, the MPC has never altered a QE programme once it has been announced, said Saunders, who predicts a total QE spend of 500 billion pounds, which would amount to some 30 percent of Britain's gross domestic product.

The threats to the economy will push the Bank to eventually add another 50 billion pounds, bringing the total to 325 billion pounds, median forecasts from a Reuters poll showed.

Minutes from the October meeting showed policymakers considered injecting more stimulus into the economy, boosting prospects for additional future asset purchases.

(Editing by John Stonestreet)