BoE likely to keep rates steady despite looming recession

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LONDON, Aug 4 (AP) The Bank of England (BoE) is expected to keep interest rates steady at 5 per cent despite a looming recession when it announces its monthly decision later Thursday.brThe central bank has kept official interest rates unchanged since April as - unlike the US Federal Reserve - its main focus is on keeping inflation at the government's 2 per cent target rather than stimulating growth.brWith inflation running at 4.4 per cent due in part to imported high energy and food prices, the bank has so far ruled out further rate cuts to follow the two trims it made earlier in the year for fear of spurring inflation yet higher.brHowever, members of the bank's monetary policy committee have recently become markedly more concerned about the state of the economy, leading to increasing speculation that a cut in the cost of lending is on the way by the end of the year.brBank governor Mervyn King acknowledged last month that two negative quarters of economic growth - the working definition of a recession - was very possible.brCommittee member David Blanchflower, who has voted for a quarter of a percentage point cut for the past three months, has said he is concerned that an extended and deep recession is possible unless interest rates are cut soon and by a significant amount.brIt now seems a question of when, rather than will, the BoE cut interest rates, said Global Insight economist Howard Archer, adding that he expects a cut before the end of 2008.brThe latest figures from Britain's National Office for Statistics showed that gross domestic product growth ground to a halt between April and June, ending more than 15 years of continuous expansion.brTreasury chief Alistair Darling warned this week that Britain faced its worst economic situation in 60 years, comments viewed by many economists as foreshadowing a significant downward revision in the government's forecasts for GDP growth from the current 2.5 per cent for this year.