Economics Weekly by Lloyds TSB

The highlight of the week in the UK is the BoE policy announcement which will be made in light of the latest Inflation Report forecasts. No change is expected to bank rate or the size of the QE programme Markets to focus on US private sector job creation, policy meetings

The highlight of the week in the UK is the BoE policy announcement which will be made in light of the latest Inflation Report forecasts. No change is expected to bank rate or the size of the QE programme, but views on the MPC are clearly divided. For the third month in a row Andrew Sentance is expected to vote for an interest rate hike, but there is little to suggest that he will find support from his colleagues. In fact, in early July, for a number of MPC members, the immediate decision was not whether to tighten policy, but rather whether to implement additional QE. Since then, a stronger than expected Q2 GDP figure may have alleviated some near-term concerns, but judging by the recent comments, the MPC as a whole, will likely maintain its wait-and-see stance for some time. In terms of economic data, manufacturing output figures for June should confirm strong quarterly growth in Q2 (the ONS has already published a preliminary estimate as part of the first GDP release). But the latest PMI readings are expected to indicate that both industrial and services sector activity is slowing.

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