LONDON (Reuters) - A majority of economists expect the Bank of England to cut interest rates on Thursday after a raft of weak economic signals tipped the balance in favour of lower borrowing costs.

A Reuters poll showed 48 out of 63 economists think the Monetary Policy Committee will vote for a 25 basis points cut to 5 percent on Thursday.

Here are some of the factors policymakers will take into consideration before reaching their decision.

CREDIT CRUNCH

The BoE fired a warning to markets and consumers last week in its quarterly credit conditions survey that the credit crunch is likely to intensify.

The lending squeeze is starting to have a tangible impact on the real economy and money markets remain tight, with interbank lending rates well above official borrowing costs.

INFLATION

One argument against cutting rates this week is the inflation problem that is helping to make this year what BoE Governor Mervyn King has dubbed the toughest challenge for the MPC since it was granted independence on rate decisions in 1997.

Consumer price inflation hit 2.5 percent in February and is expected to rise towards 3 percent in the coming months on the back of rising oil and food costs. Inflationary pressures are simmering throughout the economy as companies try to pass on soaring costs to customers.