The Bank of England is widely expected to raise interest rates again on Thursday and more hikes are firmly on the cards as policymakers battle to cool soaring inflation.

Members of the nine-strong Monetary Policy Committee (MPC) are set to increase rates from 0.25% to 0.5% as the Bank’s quarterly set of forecasts are likely to show eye-watering inflation this spring.

It would mark the Bank’s first back-to-back increase since June 2004, coming after it lifted rates from 0.1% to 0.25% in December to try to rein in rampant inflation.

Financial markets are now pricing in four rises in 2022, which would see rates hit 1.25% by the year end, with a further rise to almost 1.5% by next spring – the highest level since January 2009.

The Bank is taking action to bring inflation back to its 2% target, even though Omicron knocked the economy in December and early January.

Consumer Prices Index (CPI) inflation already hit a near 30-year high of 5.4% in December and painful energy price rises are expected to push it beyond 6% this spring.

Experts are predicting Ofgem’s energy price cap review also on Thursday will reveal a 49% rise, pushing the average household annual bill to around £1,900.

Martin Beck, chief economic adviser to the EY Item Club, said: “While the case for the MPC raising interest rates in February’s meeting is far from unambiguous, the EY Item Club expects the committee to take that step and increase Bank Rate to 0.5%.

“Granted, the Omicron variant has almost certainly left the economy weakened as a result of greater consumer hesitancy and a rise in the number of people isolating.

“But that the MPC raised Bank Rate in December regardless indicates that the committee placed less weight on the virus. And recent developments are likely to reinforce this stance.”

The hit to growth is likely to have been “more modest” than first feared, he added, while recent official figures confirmed the UK jobs market continues to fire on all cylinders with little impact from the end of furlough.

But the Bank is still left with a difficult decision, given the knock to consumer pockets from looming energy bills and fuel price rises – which policymakers are powerless to control with rate hikes.

Governor Andrew Bailey recently told MPs there were also worrying signs that inflation pressures may last longer than first thought, with sky-high wholesale energy prices now looking likely to last until the second half of 2023.

He also cautioned over recent signals of more broad-based wage rises across the UK economy.

Laith Khalaf, head of investment analysis at AJ Bell, said: “The Bank of England can’t control the major factors that will push inflation up in the immediate future, such as global energy prices or elevated shipping costs.

“But a February rate hike would help persuade the market that the Bank really means business, and help to stave off embedded inflationary expectations that could spark a dreaded wage-price spiral.”

Economists are split on how many rate rises there will be this year, but many believe the Bank will be more cautious with the pace, especially if it moves to begin scaling back its £895 billion quantitative easing programme.

The Bank has already said it would consider so-called quantitative tightening when rates hit 0.5%, which means the Bank could make the announcement alongside Thursday’s decision and see it lead the charge among its central bank counterparts.