However, as part of his modernising mandate, BoE Governor Mark Carney has altered this and for the first time ever, tomorrow will see the minutes and the decision will be released concurrently. The only thing that was lacking was spending and inflation which has prevented the Fed raising until now. This 16 per cent appreciation makes UK-produced goods and services more expensive to people whose earnings are in euros.
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The difference is that the UK consumer is spending, not splurging but enough to sustainably drive economic growth.
The Bank has been waiting for stronger wage growth to emerge before contemplating the timing of an increase.
With all this in mind, the message from BoE policy makers is becoming increasingly important and that message has become far more hawkish recently.
Philip Aldrick, from The Times, said: “Wrapping up the Inflation Report with the rate decision and minutes is overkill”. “Even with the sell-off today, we’re not fully pricing in a February rate hike yet, which is our central call”.
On the company news front, Numis reckons interim results from RSA Insurance (LONLRSA) have taken on less relevance given recent potential bid interest from Swiss insurer Zurich, but, be that as it may, it is expecting a significant improvement in profitability, as results from other insurers indicate the weather has been a lot kinder to the sector this year.
From this Thursday, the monthly rate decision and the minutes of the Bank’s Monetary Policy Committee (MPC) meeting will be released together, without the normal fortnightly gap.
Samuel Tombs, senior UK economist at Capital Economics said: “We still think that a majority of MPC members will hold off from voting to raise interest rates until next year”. Mr. Weale is a known hawk who has voted for hike earlier in 2014.
However some economists point to key factors that could put downward pressure on inflation – including a renewed slump in the oil price and a second 5% cut in household bills announce by British Gas.
We’ll also get some data from the US, with weekly jobless claims figures and mortgage delinquencies for the previous quarter being released.
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Forward contracts based on the sterling overnight index average, or Sonia, show they predict rates will rise in May. While Australia continues to face difficulties as a result of tumbling commodity prices, unemployment has been falling this year and the Reserve Bank of Australia seems fairly comfortable with the way things are, hence the decision to leave rates unchanged.
