However, the Bank will repeat its earlier warnings that it will be looking for money supply growth to fall back after its recent surge.
Figures due today and Thursday are likely to show further reductions in inflation both at the factory gate and on the high street, but other evidence is pointing to a pick-up in consumer spending.
The Chartered Institute of Marketing predicts, in a report published today, that higher growth means inflation will exceed its target and base rates will climb to 9 per cent in 1998.
City analysts suspect that Eddie George, Governor of the Bank of England, disagreed with the Chancellor's decision to cut interest rates by a quarter point to 6.25 per cent in January, following a similar move the previous month. The Bank's Inflation Report will therefore be scrutinised closely for evidence about when the Governor might go along with another base rate reduction.
Economic statistics since the January monetary meeting have been mixed, with alarming signs of weakness in manufacturing and evidence of an increasingly buoyant consumer sector.
The Finance and Leasing Association adds weight to this today with a survey of members showing record store-card credit of pounds 598m in December. Consumers took out more than pounds 20bn from FLA members in 1995, a 16 per increase on 1994.
The Association, which finances nearly a third of UK investment in plant and equipment, said December was also a record month for lending to large- scale infrastructure projects. The December figure of pounds 1.3bn was a staggering 272 per cent higher than a year earlier, although demand for finance for other investment projects was a more modest 14 per cent higher.
Additional anecdotal evidence of buoyant consumer spending is provided by the latest weekly figures from John Lewis. The group reports that trading in its department stores has started the new year on a positive note, while performance at its Waitrose supermarkets has been ''sparkling''. Sales growth for the entire group is approaching double digits.
The outlook for a consumer-led increase in the economy's growth leads the Chartered Institute of Marketing to forecast in a report out today that base rates will have to rise to 9 per cent early in 1998. Although economist Professor Douglas McWilliams forecasts inflation below 2 per cent this year and next, he predicts it will climb to 3.1 per cent two years hence.
But unemployment would fall below two million by then thanks to the pick- up in growth, according to the forecast.
Today's producer price statistics are likely to show that prices paid by manufacturers for their materials were flat last month, thanks to the retreat of the earlier bulge in commodity prices. Prices at the factory gate are expected to have risen in January mainly due to higher excise duties. Economists predict ''core'' output prices, excluding food, drink, tobacco and petrol, will climb modestly.
The headline rate of retail price inflation for January, due on Thursday, is likely to edge down to 2.9 per cent from December's 3.2 per cent. Lower excise duty increases than last year and lower mortgage rates will account for most of this decline.
The target measure, excluding mortgage interest payments, is expected fall to 2.9 per cent from 3.0 per cent in December.
The Government's target states that inflation excluding mortgage interest payments should fall below 2.5 per cent both before the end of the current parliament in May 1997 and over a two-year horizon.