ECONOMISTS are forecasting that the Bank of England will stay its hand on interest rates later today for the eighth month in a row, though there are fears that one or two quarter-point rises will eventually be needed to engineer a slowdown in domestic demand.

At its last two meetings, the Bank's monetary policy committee has voted five-to-four in favour of leaving rates on hold at 6%. With the committee split down the middle, an increase this month cannot be ruled out.

A change in the composition of the committee could help the doves. John Vickers, a leading hawk, is being replaced as chief economist by Charles Bean, thought to be a middle-of-the-road academic with no axe to grind.

With the targeted rate of inflation declining to 1.9% and sterling recovering lost ground against the dollar, the case for raising rates appears weaker this month than last. The US Federal Reserve Board held its key interest rate steady at 6.5% on Tuesday.

But consumer demand needs to slow down to make way for the extra public spending the Government is planning from next year. There is little sign of this happening. Some eyebrows would have been raised in Threadneedle Street at the savings ratio falling to 3%, its lowest rate since the days of Nigel Lawson.

The logical time for the Bank to consider raising rates would be November, ahead of the publication of its quarterly inflation report, which will include fresh forecasts on economic growth and inflation.

But Adam Cole, UK economist at HSBC Investment Bank, warned yesterday that the fuel effect which was distorting survey evidence was also likely to distort the official estimate of gross domestic product for the third quarter, due to be published on October 20.

As a result, the crunch time for monetary policy could be delayed by a month or two until the picture becomes clearer.

The fuel crisis which paralysed Britain for a week in September dealt a blow to retail sales and the usually buoyant services sector, the latest surveys showed.

The Confederation of British Industry's distributive trades survey found sales volumes in September grew at their slowest pace for 17 months. Sales volumes were again below retailers' expectations.

Alastair Eperon, chairman of the distributive trades panel, said: ''With inflationary pressures still subdued, there's nothing in the survey that points to a need for a rise in interest rates.

''The fuel crisis clearly had an impact as deliveries failed to arrive and shoppers stayed at home. However, the full effect of the blockade remains uncertain.''

In another survey, the Char-

tered Institute of Purchasing and Supply found that service sector activity was also hit by the fuel crisis while price pressures mounted. The report found the sector's business activity index fell to 55 last month from 58.3 in August. As any reading above 50 denotes expansion, the sector did not contract, but grew more slowly.