The Bank of England is expected to cut interest rates for the first time since the financial crisis this week and lower its UK growth forecasts by the biggest margin on record, in response to the uncertainty caused by the EU referendum result.

The Bank’s monetary policy committee will announce a decision on Thursday, when the latest inflation report and growth forecasts will be published. If interest rates are cut, it will be the first time they have changed since being set at 0.5% in March 2009.

The MPC held off reducing official borrowing costs from their record low in the immediate aftermath of the Brexit vote on 23 June. However, the committee has dropped heavy hints that it will act this week when fresh forecasts for the economy are published. Mark Carney, the Bank’s governor, warned before the referendum that voting to leave could push Britain into a recession.

The Bank’s forecasts are expected to include an unprecedented downgrade of the prospects for the British economy. In May’s inflation report, it forecast that the economy would grow by 2.3% this year, but economists believe this could now be slashed to less than 1%, which would be the largest downgrade in the Bank’s forecasts between inflation reports since it became independent in 1997.

The nine-member MPC will make its decision nearly two weeks after business and consumer surveys conducted folowing the vote to leave the EU signalled a decline in activity and confidence. Cutting borrowing costs could shore up activity in a jittery housing market by lowering mortgage costs. The Bank will also hope to boost business sentiment and companies’ willingness to keep investing amid the uncertain outlook. As such, it may go further than rate cuts and announce a programme of money printing or lending schemes.

The Bank’s chief economist, Andy Haldane, has called for a big package of measures to support the UK’s post-referendum economy. The policymaker Martin Weale, who has previously opposed the rest of the committee and voted for rate rises, suggested that he was likely to use this week’s meeting to support some form of stimulus for the economy.

Some economists have warned that cutting interest rates on the basis of the early reaction to the Brexit vote would be premature, but most experts believe the Bank will want to act swiftly, and the consensus is that it will cut rates to 0.25%.

In a Reuters poll of 49 economists published last week, all but three expected the Bank to cut at least 25 basis points to 0.25%. It is a stark contrast to expectations before the vote to leave the EU, when the next move in interest rates was seen as likely to be upwards.

Allan Monks, an economist at JP Morgan. said: “The Bank of England seems all but certain to ease policy, with only the scale and form of easing in question.”

Monks is predicting a bigger cut than many of his peers in the City, pencilling in a drop in official interest rates to zero. “We see little reason for the Bank of England to restrict itself to a 25 basis point rate cut in August, in terms of both the need for a larger policy response and the Bank of England’s ability to deliver one,” he said.

There are expectations that the Bank will expand the quantitative easing (QE) programme, whereby it creates electronic cash to buy bonds and so inject money into the financial system. But economists are wary of predicting that such a move will come as soon as this week.

Alan Clarke, an economist at Scotiabank, said there is a mood of caution in the City after the Bank confounded many analysts by not changing interest rates in July.

“Having had its fingers burnt at the July meeting, the market is understandably sceptical, as are we, about the extent of the package to be unveiled at the August meeting,” he said, predicting that interest rates will be cut to 0.25%, with a possible £50bn expansion of QE.

In the past, the QE programme has been criticised for not providing enough help to the real economy.

Adam Marshall, the acting director general at the British Chambers of Commerce, said the Bank could design the next phase of QE to help small and medium-sized businesses (SMEs).

“If you could package up SME debt and use QE to buy it, that could be very interesting in terms of raising money when people are risk averse,” he said.

There are some expectations that the Bank could revitalise the funding for lending scheme, under which it has provided incentives for high street banks to lend more to households and businesses.

There is also the option of so-called helicopter money, under which a central bank prints money so that finance ministries can hand it out to citizens or spend it on big infrastructure projects.

Philip Shaw, an economist at Investec, said: “This option conveys visions of airborne aircraft dropping £20 notes on the streets of the UK. However, in practice, a helicopter money policy would most likely take the form of the BoE buying government perpetual bonds, perhaps covering specific infrastructure projects.”

But economists have warned that the impact of the Bank’s potential actions could be limited. “Interest rate cuts and QE are not panaceas for political uncertainty,” said Holger Schmieding and Kallum Pickering of Berenberg.

“The crucial factor weighing on the UK growth outlook is the uncertainty relating to the Brexit negotiations and new trade deal with the EU.”