Economics Weekly by Lloyds TSB

It is a busy week in the UK with a number of important releases to keep the market’s attention. The Bank of England is set to publish the minutes of November’s MPC meeting where we look for another split in the vote, highlighting the differing opinions among policy makers. US inflation to hit lowest since first man in space

It is a busy week in the UK with a number of important releases to keep the market’s attention. The Bank of England is set to publish the minutes of November’s MPC meeting where we look for another split in the vote, highlighting the differing opinions among policy makers. The minutes follow the November Inflation Report published last week, which means that they will be scrutinised not so much for what they say about the Committee’s central view, but rather any insight they provide on the opinions of the members at the periphery. In particular, the focus is likely to be on whether any member joined Adam Posen in voting for additional QE. In terms of data, key releases relate to inflation, retail sales and the labour market. We look for the annual CPI rate to have remained at 3.1% in October, which would trigger another quarterly exchange of letters between the BoE Governor and the Chancellor. Meanwhile, the retail sales figure is expected to show a modest rise in volumes after two consecutive monthly falls. However with confidence still fragile and this week’s labour market data expected to confirm that income growth is subdued, the outlook for household spending after January’s VAT hike remains highly uncertain.

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