WITH with the Bank of England postponing its next interest rate decision, we will have to wait until next week (September 22) to see if analysts are right and we see the base rate rising by at least 0.5 points percentage at 2.25%. This would take the base rate to its highest level since December 2008.
It remains to be seen whether the decision of the Bank’s Monetary Policy Committee will change in light of Prime Minister Liz Truss’ sweeping energy bill guarantee plan. While energy bills have been capped, the measures are set to cost the Treasury more than £100billion over the next two years and wider inflation still remains high for households and businesses.
Later this week we will have the latest UK Inflation (Consumer Price Index) figures and July GDP estimate and trade figures as well as construction production data. We also need to get updated labor market numbers and August retail sales numbers in the coming week.
Something that will occupy at least some of the new Prime Minister’s attention will be Northern Ireland Protocol. The so-called grace periods, which the EU and the UK agreed in 2020 to allow lighter controls on trade between Britain and Northern Ireland, are due to expire on Thursday.
Ms Truss was considering initiating Article 16 proceedings, but whether she will do so remains to be seen. Her allies have said she is unlikely to activate the emergency derogation provisions of Article 16 of the Northern Ireland Protocol in the coming weeks. Meanwhile, US President Joe Biden has issued a clear warning to the UK not to unilaterally tear up Britain’s deal with the EU over Northern Ireland trade deals.
Outside the UK, expected US inflation data is the order of the day. The US consumer price index reading is expected to show a slowdown in the US annual inflation rate to 8.1% in August from 8.5% in July.
And in Kenya, new President William Ruto will be sworn in this week after his election victory was upheld by the country’s Supreme Court.
In the markets, it’s a relatively busy week for corporate announcements. Stock watchers will keep an eye on Ocado which, like all retailers, is likely to feel the worst effects of the stock market crunch caused by the cost of living crisis. DIY chain Wickes, furniture chain Dunelm and train ticket seller Trainline will also post results. And while John Lewis may not be publicly traded, Thursday’s half-year results will give us some good insight into its customers’ buy-in to its desire to be the “world’s leading moment-based retailer.” that is, spending to make everyday moments brighter, apparently – and I guess, what that means for the rest of the industry. That sentiment could also spill over to the likes of high-end blender maker Fever-Tree Drinks, which reports first-half results this week.
