Thursday preview: BoE to keep interest rates steady in December, analysts expect

The Bank of England is expected to keep interest rates unchanged when the central bank announces its latest policy decision on Thursday.

Analysts see the BoE holding interest rates at 0.5% and the asset purchase programme at £375bn. Many economists predict the BoE will keep rates steady well into the New Year.

While many estimate no surprises this month, the minutes of the BoE's meeting - published alongside the policy announcement - may provide clues on the timing of an interest rate hike.

In November, the BoE’s Monetary Policy Committee voted 8-1 in favour in no change in policy, noting that emerging markets have slowed markedly.

“Currently, just one member (Ian McCafferty) believes rates should go up immediately,” said HSBC analysts, which predicted no change in BoE policy or the voting pattern.

“The news on the month could be enough to persuade more hawkish members to join him,” the bank added, pointing to a fall in unemployment and an improved outlook on PMI surveys.

HSBC said potential hawks will probably wait to see another month of economic data and the reaction to the Federal Reserve’s decision on policy next week before backing a rate increase. The Fed is widely expected to raise rates this month.

In the minutes of the BoE’s Financial Policy Committee meeting in November, released on Wednesday, the central bank warned of volatility of capital flows if the Fed raises interest rates.

“Capital flows had been sensitive to diverging prospects for monetary policy around the world and there was a risk of further volatility in capital flows as that policy divergence progressed,” the minutes said.

The BoE is also likely to consider the European Central Bank’s decision to boost stimulus last week. Amid prolonged weak Eurozone inflation and a stagnant recovery, the ECB extended the asset purchase programme to March 2017 and cut the deposit rate by 10 basis points.

Craig Erlam, senior market analyst at Oanda, said: “While I have no doubt that the BoE has a very difficult job on its hand in deciding when it will be appropriate to begin the rate hiking cycle, given the impact of the strong pound on the economy and the weakness in its largest export partners, I feel the clear confusion within the central bank on the subject is coming across to the markets.

“The BoE doesn’t appear to want to commit one way or another which tells me that it is no more sure on when rates will rise than any of the rest of us.”

Thursday 10 December

INTERIMS
Darty, Micro Focus International, Photo-Me International, Sports Direct International, Versarien

INTERIM EX-DIVIDEND DATE
3i Group, Babcock International Group, BCA Marketplace, Big Yellow Group, British Smaller Companies VCT, Brown (N.) Group, Caffyns, Clipper Logistics , Cranswick, Cropper (James), Dee Valley Group, DFS Furniture, General Industries, Homeserve, International Greetings, Investec, Montanaro European Smaller Companies Trust, MS International, Next, Northgate, Palace Capital , Pets at Home Group , Telford Homes, Ventus VCT D Shs, Ventus 2 VCT, Ventus 2 VCT 'C' Shares, Ventus 2 VCT D Shs, Ventus VCT, Ventus VCT 'C' Shares

QUARTERLY PAYMENT DATE
Canaccord Genuity Group Inc., IBM Corp.

QUARTERLY EX-DIVIDEND DATE
F&C Commercial Property Trust Ltd., Real Estate Credit Investments PCC Ltd, Real Estate Credit Investments PCC Ltd Pref Shs

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Continuing Claims (US) (13:30)
Import and Export Price Indexes (US) (13:30)
Initial Jobless Claims (US) (13:30)
Treasury Budget Statement (US) (19:00)

GMS
Ferrex

FINALS
Lakehouse, TUI AG Reg Shs (DI)

ANNUAL REPORT
TUI AG Reg Shs (DI)

SPECIAL EX-DIVIDEND PAYMENT DATE
Artemis VCT, Keystone Inv Trust, Netcall, Polymetal International

EGMS
Norish Units

AGMS
AB Dynamics, Aberdeen Latin American Income Fund Ltd , BlackRock Greater Europe Inv Trust, Greatland Gold, Nanoco Group, Nektan (DI), Plexus Holdings, Starvest

TRADING ANNOUNCEMENTS
Go-Ahead Group, PZ Cussons

UK ECONOMIC ANNOUNCEMENTS
Balance of Trade (09:30)
BoE Interest Rate Decision (12:00)
BoE Interest Rate Minutes (09:30)
RICS Housing Market Survey (09:30)

FINAL DIVIDEND PAYMENT DATE
Fidelity Asian Values, Finsbury Food Group

FINAL EX-DIVIDEND DATE
Artemis VCT, Associated British Foods, DFS Furniture, JPMorgan Chinese Inv Trust, K3 Business Technology Group, Netcall, Numis Corporation, Pan African Resources, Scottish Oriental Smaller Companies Trust, Waterman Group