By Sumeet Desai

LONDON (Reuters) - The Bank of England is expected to hold interest rates steady on May 8 but grim economic news clearly leaves open the possibility of another quarter-point cut as the central bank prepares its new forecasts.

Only 5 out of 65 analysts polled by Reuters this week predict the BoE's Monetary Policy Committee will cut rates for the second month running and the fourth time since December when it rounds off its two-day meeting next Thursday.

But 40 say the BoE will cut borrowing costs by another quarter-point in June, taking rates down to 4.75 percent, as worries over slowing growth topple concerns about rising inflation.

Arch-dove David Blanchflower clearly looks as if he will call for lower rates. He said a few days ago the economy faced recession and house prices crashing 30 percent if the central bank did not take urgent action.

But hawks like Andrew Sentance and Tim Besley seem worried about rising prices -- they opposed last month's quarter-point cut.

Here are some of the factors the BoE will consider at its two-day meeting.

FINANCIAL MARKETS

While the credit crunch continues, the BoE last month unveiled a new scheme that allow banks to trade their hard-to-shift mortgage assets for safe government bills. Hawkish policymakers have said this will soothe credit conditions and allow the central bank to get on with its main job of fighting inflation.