The Bank of England is this week expected to hold interest rates at 0.75 per cent, despite pressure from some quarters for a further quarter-point cut.
On Thursday the Bank’s nine-member monetary policy committee, which is responsible for setting the interest rate, will announce its decision.
With the election finished, there has been some discussion as to whether the committee would commit to a rate cut.
At last month’s meeting, two members of the committee, Michael Saunders and Jonathan Haskel, pushed for a 0.25 per cent cut, and analysts expect the pair to maintain the position this week.
Official figures show that economic growth has almost crawled to a halt and with inflation below the two per cent target, calls for extra stimulus have been growing.
The decision comes as the Treasury gets ready to announce who will be the Bank’s next governor, with current chief Mark Carney due to step down on 31 January.
Over the past few weeks former deputy governor and current head of the London School of Economics Dame Minouche Shafik has become the favourite to take up the position.
Shafik, who would be the first female chief in the banks history, is considered a pragmatist who could work well with Boris Johnson’s red tape cutting approach.
Financial Conduct Authority (FCA) boss Andrew Bailey, deputy governors Jon Cunliffe and Ben Broadbent, and former BoE lifer Sir Paul Tucker are all remain in the running.
Despite City gossip about the potential new incumbent of Threadneedle St’s biggest chair, Government sources were keen to play down the idea that final decisions have been made.
In November chancellor Sajid Javid delayed the announcement of the new governor due to the general election.
On Friday sterling closed at $1.33 and €1.20 respectively on the back of Johnson’s stunning victory at the polls. The FTSE 100 closed 1.1 per cent up, whilst the FTSE 250 rose 3.4 per cent.