The Bank of England looks all but certain to raise interest rates by a quarter-point later on Thursday but analysts are divided over whether borrowing costs will then have to rise again early next year.

BoE Governor Mervyn King said recently there was no such thing as a "done deal" but all 58 analysts polled by Reuters last week disagreed, predicting the central bank's Money Policy Committee would lift rates to 5.0 percent at noon.

That would take them to their highest level since the September 11 attacks on the United States prompted the most aggressive round of global monetary easing in decades, and puts borrowing costs 150 basis points above the 48-year low hit in 2003.

"A 25 basis points interest rate hike to a five-year high of 5.0 percent on Thursday looks mightily like a done deal to us," said Howard Archer, chief UK economist at Global Insight.

Policymakers are worried that inflation -- already running above the BoE's 2.0 percent target may climb further and prompt higher wage demands in the New Year pay round.

The price measure on which most wage deals are based was running at an 8-year high in September as high petrol and home utility bills raised the cost of living for most Britons.

So far there has been little sign of a wage spiral but the MPC has repeatedly indicated it wants to send out an uncompromising message to bosses and workers alike that it will not allow big pay deals to fuel inflation.

GOVT GIVES GREEN LIGHT

The government, in the form of Treasury minister Ed Balls, also appears to have given the central bank a green light to tighten the screws by warning that policymakers have to be vigilant.

The two newest members of the MPC -- Andrew Sentance and Timothy Besley -- wanted to hike rates in October.

Most of the others thought it better to wait for the analysis of their November forecast round but judged the case between hiking rates and keeping them steady finely balanced.

Much of the economic news since has been pretty strong.
House prices, particularly, keep surprising on the upside, showing no sign that August's surprise hike has deterred property-mad Britons from taking on even more mortgage debt.

The respected National Institute of Economic and Social Research said this week the BoE would not only have to raise rates on Thursday but again in the early months of 2007.

Other economists, however, are not so sure.