Week ahead: Bank of England speak to dominate agenda as investors look for clues on interest rate path

Investors will be parsing over a string of speeches from top Bank of England rate setters this week for clues on whether the central bank is close to ending its aggressive campaign to tame inflation.

Ben Broadbent, a deputy governor at the Bank, kicks off a busy week of central banker speech at Threadneedle Street’s annual research conference on Monday.

Chief economist at the monetary authority and ex-Goldman Sachs banker Huw Pill takes the reins from Broadbent on Tuesday before Catherine Mann’s remarks in the morning.

Mann at an event hosted by the economic think tank the Resolution Foundation said she thinks borrowing costs need to keep rising to prevent high inflation embedding into the UK economy.

The rate of price increases has fallen for three straight months from a peak of 11.1 per cent to 10.1 per cent and is expected to potentially hit the Bank’s two per cent target by the end of the year.

Those forecasts have raised expectations of the Bank ending its rate hike cycle at its next meeting on 23 March with a 25 basis point rise, which would take the cumulative level of rises to more than 400 basis points and leave borrowing costs at a 15-year high of 4.25 per cent.

“Lastly, and more importantly, Governor Bailey will be taking the spotlight on Wednesday, in what will likely be a key speech for markets, at the Cost of Living Crisis Conference,” Sanjay Raja, senior economist at investment bank Deutsche Bank, said in a note to clients over the weekend.

On the data front, lending and mortgage numbers from the Bank on Wednesday top the bill, with analysts expecting approvals for home loans to have slipped again to around 33,000.

Households are souring on moving into a new home due to the cost of living crisis and higher interest rates squeezing affordability.

Nationwide’s house price index, out on the same day, is poised to show prices are stagnating in response to slow down in demand.

Final purchasing managers’ indexes on Friday are likely to reinforce last week’s early estimates revealing the UK private sector economy shockingly expanded in February, possibly signalling the country will avoid a much-tipped recession this year.

Middle-class favourite and online supermarket Ocado dominates the corporate agenda with the firm posting full year results on Tuesday. Fund manager abrdn also updates markets on the same day.

London’s FTSE 100 posted one of its worst weeks of 2023 last week, tumbling 1.67 per cent to close the week far away from the record 8,000 point mark it breached earlier this month.

FTSE 100 closed lower last week