Week ahead: City braces for another Bank of England rate hike

All eyes will be on Threadneedle Street this week as the City braces for another rate hike from the Bank of England.

The Old Lady is widely expected to lift borrowing costs again on Thursday, marking the first time the central bank has hiked rates at successive meetings since 2004.

The Bank lifted rates for the first time in over three years at its last meeting in December.

Thomas Pugh, economist at RSM UK, expects “a unanimous [monetary policy committee] vote for an interest rate rise from 0.25 per cent to 0.50 per cent.”

“The committee has previously made it clear that it is more concerned about the risk from inflation than the danger of weaker economic growth,” he added.

Before Thursday’s rate decision, fresh mortgage approvals and consumer borrowing data are released on Tuesday. Investors will be combing through the details for any signs of demand in the UK economy cooling.

Final IHS Markit purchasing managers’ indexes for the manufacturing and services industries are published on Tuesday and Thursday respectively.

Any signal that the Omicron impact has been minimal is likely to jolt London’s top indexes upwards.

Sanjay Raja, senior economist at Deutsche Bank, expects “the final prints to remain unchanged. But, risks are tilted to a slightly stronger print, as more responses reflect the more upbeat news on the end of ‘Plan B’ restrictions.”

On the corporate side, oil giant Shell publishes full-year results on Thursday, and is widely expected to have ridden the boom in oil prices over the last year.

Telecoms giant BT reports third quarter earnings on the same day.