Bank to hold rates in June

By Jonathan Cable

LONDON (Reuters) - The Bank of England is not likely to change rates from 5.0 percent next week and economists expect only one cut this year despite a flagging economy struggling with soaring inflation, a Reuters poll taken this week showed.

The poll of 71 economists, taken May 27-29, found only two of them predicted the Monetary Policy Committee would cut rates at its June meeting but 40 of them predicted a cut by September as the BoE tries to breathe life into a slowing economy.

"It is clear that (MPC) members intend to resist any temptation to cut rates again this time, thanks to the poor inflation outlook," said Philip Shaw, an economist at Investec.

Polls conducted by Reuters prior to rate meetings have had a perfect score this year in forecasting the bank's announcements.

The median probability for a cut by the end of the year was 70 percent, down from 80 percent in the previous poll, as economists begin to believe the battle against inflation will prevent the bank from taking action against a slowing economy.

The economy grew at its weakest rate in three years in the first quarter at only 0.4 percent, below the long-term trend. A Reuters poll published last week found economists forecasting economic growth at only 1.7 percent in 2008 -- a sharp slowdown from the 3.0 percent in 2007.

Policymakers are also wary of the trade-off. Andrew Sentance, one of the most hawkish members of the MPC, said last week Britain looked set for a "significant slowdown" and might tip into recession.

RATE CUTS COMING