Week Ahead

Inflation to offer pointers on interest rate cuts

Money - own pic
Inflation is expected to fall

Inflation will be a key focal point for the coming week and offer a crucial pointer to the Bank of England’s next decision on interest rates.

The consumer price index (CPI) for December, due on Wednesday, the CPI is forecast to show prices gained 0.1% month-on-month, though the annual rate of inflation is expected to have eased to 3.8% from 3.9%. Core inflation, meanwhile, is tipped to have slowed to 4.9% last month, down from 5.1% in November.

However, US prices grew by 3.4% in December on an annual basis, up from 3.1% and above expectations, which may temper expectations for a sooner-than-expected interest-rate cut from either the Federal Reserve or the Bank of England. 

Tim San Wong, Global Capital Markets associate at Validus Risk Management says that given largely resilient economic data he does not expect an “aggressive cutting cycle” from the Bank.

Others believe inflation will be down to the government’s 2% target by April which will pave the way for an interest rate cut in May.

Scottish Enterprise will host an event involving the First Minister Humza Yousaf and Wellbeing Economy Secretary Neil Gray in Aberdeen.

City Diary

Monday 15 January

  • Trading updates from Rio Tinto and PageGroup
  • Davos World Economic Forum (all week)
  • UK labour market figures
  • Rightmove UK house price index

Tuesday 16 January

  • Trading updates from Experian and QinetiQ

Wednesday 17 January

  • Trading updates from Galliford Try and 888
  • UK inflation
  • Chinese industrial production, retail sales and tangible fixed asset investment growth
  • EU inflation
  • US retail sales
  • US industrial production

Thursday 18 January

  • Trading updates from Sage, Flutter Entertainment, Kier, Currys, Bakkavor and N Brown
  • US weekly initial unemployment claims

Friday 19 January

  • Trading updates from DFS Furniture
  • UK retail sales


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