Week ahead: BoE policy decision and Inflation Report in focus

The Bank of England is widely expected to cut interest rates for the first time in seven years next week as the central bank assesses the fallout of Brexit.

The BOE’s Monetary Policy Committee on 14 July voted 8-1 to maintain the Bank Rate at 0.50%, surprising economists who had expected a 25 basis point cut. The Committee voted unanimously to maintain the asset purchase programme at £375bn.

The Bank said it was waiting for more post-Brexit economic data before taking action. In the minutes of its July meeting, the BoE said it was likely to loosen policy in August when the data becomes available.

The Bank meets on Thursday, 4 August, with analysts expecting interest rates to be cut to 0.25%.

“We expect a 25bps cut to the bank rate (to 0.25%), and measures to support credit to the real economy, possible another extension of the funding for lending scheme (FLS),” HSBC analysts said.

“But with gilt yields already very low, we do not expect any asset purchases.”

Since the UK voted to leave the European Union on 24 June, UK consumer confidence has taken a hit and the outlook for the economy has worsened. Weak preliminary estimates for purchasing managers’ index on UK manufacturing and services in July have also added to worries about the economy.

The Bank releases its August Inflation Report at the same time as the policy decision, which will provide more information on the impact of the EU referendum.

HSBC said: “This puts it in a tricky position: if it forecasts a recession, it could be accused of talking the economy down. But if it doesn’t, it is open to criticism for scaremongering before the referendum.”

“Given the early data – most notably the weak flash PMIs for July – we think the Bank will forecast a slightly lower than consensus growth number for 2017, possibly including a technical recession. We also expect it to increase its inflation forecast sharply on the back of the 11% decline in trade-weighted sterling, compared with the assumption on which it based its May forecasts.”

Meanwhile, the US non-farm payrolls report will also be in focus when released next Friday. Positive figures from the Labor Department will likely fuel speculation of an interest rate hike by the Federal Reserve at its next meeting in September.

Economists expect US employers added 175,000 in July and the unemployment rate remained at 4.8%.

It follows strong jobs data in June when non-farm payrolls jumped 287,000, the most in eight months.

At the Fed’s policy announcement on Wednesday, the central bank said the labour market had strengthened and job gains were robust in June. While the Fed decided to keep interest rates unchanged, the hawkish remarks were seen to suggest an interest rate hike was possible in coming months.

“However, despite the rebound in employment growth and the resilience of financial markets after Brexit, a rate hike in September may be too early for many in the FOMC,” said Rabobank.

“It would certainly not be a unanimous decision, which would make a hike counterproductive.”

Monday 1 August

INTERIMS

Ascential, Fidessa Group, Intertek Group, Senior, Trinity Mirror, Ultra Electronics Holdings

INTERIM DIVIDEND PAYMENT DATE

BBA Aviation 5% Cum Prf, Electronic Data Processing

QUARTERLY PAYMENT DATE

Mercantile Investment Trust (The), Torchmark Corp.

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Construction Spending (US) (15:00)

ISM Prices Paid (US) (15:00)

FINALS

Real Good Food

SPECIAL DIVIDEND PAYMENT DATE

Establishment Inv Trust

AGMS

Arian Silver Corporation (DI)

FINAL DIVIDEND PAYMENT DATE

Dee Valley Group, Dee Valley Group (Non-Voting), Establishment Inv Trust, Homeserve, JD Sports Fashion, Next, United Utilities Group

Tuesday 2 August

INTERIMS

Clarke (T.), Cyprotex, Dialight, Direct Line Insurance Group, Fresnillo, Greggs, Hutchison China Meditech Ltd, InterContinental Hotels Group, LSL Property Services, Shire Plc, Tullett Prebon

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Personal Consumption Expenditures (US) (13:30)

Personal Income (US) (13:30)

Personal Spending (US) (13:30)

Producer Price Index (EU) (10:00)

Q2

Shire Plc

FINALS

Clipper Logistics , Filtronic

AGMS

Kodal Minerals

TRADING ANNOUNCEMENTS

Barr (A.G.)

UK ECONOMIC ANNOUNCEMENTS

PMI Construction (09:30)

FINAL DIVIDEND PAYMENT DATE

E2V Technologies, Hibernia Reit , Johnson Matthey, KCOM Group, TR Property Inv Trust, VP

Wednesday 3 August

INTERIMS

Aggreko, Bank Pekao SA GDS (Reg S), Moneysupermarket.com Group, Non-Standard Finance, Rio Tinto

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Crude Oil Inventories (US) (15:30)

ISM Non-Manufacturing (US) (15:00)

MBA Mortgage Applications (US) (12:00)

Retail Sales (EU) (10:00)

FINALS

NWF Group

AGMS

red24

UK ECONOMIC ANNOUNCEMENTS

BRC Shop Price Index (00:01)

FINAL DIVIDEND PAYMENT DATE

De La Rue, Montanaro European Smaller Companies Trust, Record, TalkTalk Telecom Group , Vodafone Group

Thursday 4 August

INTERIMS

Brammer, Inmarsat, Johnston Press, Ladbrokes, Mondi, RPS Group, RSA Insurance Group, Vitec Group

INTERIM DIVIDEND PAYMENT DATE

WH Smith

INTERIM EX-DIVIDEND DATE

Avon Rubber, Beazley, Blue Capital Global Reinsurance Fund Ltd (DI), Domino's Pizza Group, Hiscox Limited (DI), Inchcape, Jupiter Fund Management , Lancashire Holdings Limited, Maven Income & Growth 3 VCT, Melrose Industries, Microgen, Polar Capital Global Financials Trust, Relx plc, Tyman

QUARTERLY EX-DIVIDEND DATE

BP, Custodian Reit , Fair Oaks Income Fund Limited , GLI Alternative Finance , JPMorgan Claverhouse Inv Trust, SQN Asset Finance Income Fund Limited C SHS NPV, Unilever

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Continuing Claims (US) (13:30)

Factory Orders (US) (13:30)

Initial Jobless Claims (US) (13:30)

Q2

Inmarsat, Nokia OYJ

SPECIAL EX-DIVIDEND PAYMENT DATE

Aberforth Geared Income Trust, M. P. Evans Group

AGMS

Hayward Tyler Group, Investec, NB Private Equity Partners Ltd., Shield Therapeutics, Zamano

TRADING ANNOUNCEMENTS

UDG Healthcare Public Limited Company

UK ECONOMIC ANNOUNCEMENTS

BoE Inflation Report (12:00)

BoE Interest Rate Decision (12:00)

BoE Interest Rate Minutes (12:00)

FINAL DIVIDEND PAYMENT DATE

Mitie Group

FINAL EX-DIVIDEND DATE

Aberdeen New Dawn Investment Trust, Creston, General Industries, Halfords Group, Latham (James), Northern Bear, Plastics Capital, QinetiQ Group, SABMiller

Friday 5 August

INTERIMS

esure Group, Ibstock , Kennedy Wilson Europe Real Estate , Royal Bank of Scotland Group, William Hill

INTERIM DIVIDEND PAYMENT DATE

British Smaller Companies VCT, CVC Credit Partners European Opportunities Ltd EURO, CVC Credit Partners European Opportunities Ltd GBP, Frenkel Topping Group, Game Digital, Heavitree Brewery, Heavitree Brewery 'A' Shares, ITE Group

QUARTERLY PAYMENT DATE

British Land Company, Investors Capital Trust 'A' Shares

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Balance of Trade (US) (13:30)

Consumer Credit (US) (08:00)

Factory Orders (GER) (07:00)

Unemployment Rate (US) (13:30)

SPECIAL DIVIDEND PAYMENT DATE

Tristel

UK ECONOMIC ANNOUNCEMENTS

Halifax House Price Index (08:30)

Non-Farm Payrolls (US) (13:30)

FINAL DIVIDEND PAYMENT DATE

Anglo Pacific Group, Aveva Group, B&M European Value Retail S.A. (DI), Bonmarche Holdings, British Smaller Companies VCT, Burberry Group, Calculus VCT 'C' Shares, Charles Stanley Group, Crawshaw Group, Intermediate Capital Group, Monks Inv Trust, Next Fifteen Communications, ULS Technology , Walker Greenbank, Wincanton, Workspace Group