Thursday preview: BoE policy decision, UK retail sales, US inflation

The Bank of England’s policy announcement will be in the spotlight on Thursday, with the central bank widely expected to stand pat on measures.

Economists expect the BoE will leave benchmark interest rates at 0.25% and the asset purchase programme at £435bn amid uncertainty on Brexit negotiations.

With the Bank unlikely to change current measures, the focus will be on the minutes of the policy meeting for any remarks on the future of stimulus and interest rates to cushion the blow once the government invokes Article 50 of the formal Brexit process.

“This quarter, rising inflation levels in the UK have sparked discussions of the BoE adopting a hawkish stance in the future but the ongoing Brexit saga could force the central bank to maintain a defensive approach,” said FXTM research analyst Lukman Otunuga.

“With fears on the rise over inflation skyrocketing amid a weakening pound and the persistent Brexit woes potentially denting UK growth, the Bank of England could be under renewed pressure in 2017.”

The Bank has come under fire on claims it may have acted too hastily following the initial shock of the UK’s vote to leave the European Union on 23 June. In August the BoE cut the bank rate to 0.25% from 0.50% and expanded asset purchases by £60bn. Governor Mark Carney was forced to defend the action following a batch of strong economic data in the months after Brexit.

“In light of all the events since the referendum, I am absolutely serene about the comments—the judgments, I should say—made both by the MPC and the FPC,” Carney said at a parlimentary hearing in September.

“We are very much not out of ammunition, nor are we trigger-happy.”

As the Bank and market participants monitor the health of the economy post Brexit, UK retail sales figures for November will also be under close scrutiny on Thursday. Analysts expect an annualised 6% increase but flat sales month-on-month.

US inflation data will be published in the afternoon, with analysts pricing in 0.2% month-on-month growth in November, down from 0.4% in October. On the year, November’s consumer price index is expected to rise 1.7%, up from 1.6% the previous month.

Thursday 15 December

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INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Consumer Price Index (US) (13:30)
Continuing Claims (US) (13:30)
Current Account (US) (13:30)
Initial Jobless Claims (US) (13:30)

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TRADING ANNOUNCEMENTS
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UK ECONOMIC ANNOUNCEMENTS
BoE Interest Rate Decision (12:00)
Retail Sales (09:30)

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