By David Milliken

LONDON (Reuters) - The Bank of England looks set to keep interest rates at a 15-year high later on Thursday, but investors are most focused on whether policymakers will push back against growing market bets on a string of rate cuts next year.

The BoE has held its main interest rate at 5.25% since August, after 14 back-to-back rate rises starting in December 2021, and Governor Andrew Bailey has repeatedly said rates will need to stay high "for an extended period".

With other central banks suggesting that cuts to borrowing costs are coming, the BoE has stuck to its hard line against such talk for Britain.

While inflation is down from the 41-year high of 11.1% which it hit in October 2022, at 4.6% it is still more than double the BoE's target, higher than in other rich countries, and forecast to fall only gradually over the next two years.

However, data this week has come in weaker than expected, raising the possibility of a faster fall in inflation and that the BoE may have to change course sooner than it has suggested.

Britain's economy shrank by 0.3% in October, the first drop since July and one which suggests that it - like some countries in the euro zone - is at risk of recession.

Wage growth also slowed more than expected - though at 7.3% in the three months to October, it is still close to the record high of 7.9% set over the summer and remains the principle source of the BoE's inflationary angst.

The central bank has finance minister Jeremy Hunt's Nov. 22 budget update to consider too, which laid the ground for tax cuts in the run-up to a national election expected in 2024.

Financial markets on Wednesday priced in a full percentage point of cuts by the BoE during 2024, with the first quarter-point reduction probably taking place in May.

But this week's soft economic data may not change the BoE's view that returning inflation to its 2% target will be a slow job.

Last month the central bank set out a gloomy prognosis for Britain's economy: growth would be zero next year, but mismatches in the labour market created in part by COVID-19 and Brexit left it more vulnerable to persistent inflation than the United States or the euro zone.

"Markets are going - 'They've got to pivot'. I still think that's premature and in some ways they have to be even more gung-ho about keeping rates in restrictive territory," said Hetal Mehta, head of economic research at British investment manager St James's Place.

FED, BOE, ECB

The BoE announcement at 1200 GMT will be sandwiched between those of the U.S. Federal Reserve, which on Wednesday signalled lower borrowing costs for 2024, and the European Central Bank, which is also expected to keep rates on hold at 1315 GMT.

Markets see the Fed and ECB cutting interest rates earlier and faster than the BoE next year, largely because inflation is much nearer target in both the United States and the euro zone.

The BoE has limited opportunity to fine-tune market rate expectations, as this month it has no quarterly forecast update or news conference scheduled.

Indeed, some BoE policymakers have been making the case that rates still need to rise.

Three of the BoE Monetary Policy Committee's nine members voted for a quarter-point rate rise last month, and according to a Reuters poll of economists last week, they are likely to do so again.

The only BoE policymaker to discuss the timing of a rate cut has been Chief Economist Huw Pill who shortly after November's decision said the market expectation then for a first rate cut in August 2024 "doesn't seem totally unreasonable".

Two days later, Bailey said it was "really too early" to discuss when rates might be cut.

"The trend we've seen lately is that central bankers want to carry on talking tough until they are ready," said Isabel Albarran, Investment Officer at Close Brothers Asset Management. "But it's quite common that they cut rates at a more rapid clip than they raise them."