Thursday preview: Bank of England rate cut expected

(Sharecast News) - All eyes will be on the Bank of England's final policy announcement of the year on Thursday, with a 25 basis point cut to 3.75% nailed on after a bigger-than-expected drop in inflation. Figures released by the Office for National Statistics on Wednesday showed inflation fell in November to the lowest level for eight months. The consumer prices index rose by 3.2% in the 12 months to November, down from 3.6% in October. Consensus had been for 3.5%.

However, inflation still remains above the BoE's long-term 2% target.

Food and non-alcoholic beverages - which normally rise at this time of the year - made the largest downward contributions to inflation in November, the ONS said. Prices rose by 4.2%, down from 4.9% in October.

The biggest downward effects were seen in the prices of cakes, biscuits and breakfast cereals. Softer prices in dairy products and sugar - including jams and confectionary - also contributed.

Grant Fitzner, chief economist at the ONS, added: "The increase in the cost of goods leaving factories slowed, driven by lower food inflation, while the annual cost of raw materials for businesses continued to rise."

Core inflation, which strips out the more volatile elements of energy, food, alcohol and tobacco, fell to 3.2% from 3.4%.

Joshua Mahony, chief market analyst at Scope Markets, said: "Coming off the back of a jobs report that saw a higher unemployment rate, lower employment count, and higher claimants, markets can not only look forward to a rate cut but also a likely dovish tone from the BoE tomorrow.

"While markets are currently pricing a mere 50% chance that we see either 25bp or 50bp worth of cuts next year, the deterioration in the jobs market coupled with falling inflation could help raise hopes of a more accommodative BoE than has been predicted."

The latest policy announcement from the European Central Bank is also due on Thursday, amid expectations it will stand pat on rates.

On the corporate front, electricals retailer Currys will report interim numbers.

AJ Bell's Russ Mould and Danni Hewson said analysts will look for comments on trends in like-for-like trading in the UK and Ireland and Nordic regions.

"The September trading statement showed like-for-like growth of 3% year-on-year in the UK and Ireland and 2% in the Nordic region, across the first 17 weeks of the financial year," they noted.

Another trend to note will be subscriber growth at iD Mobile, where the year-end target is 2.5 million subs, they said.

Thursday December 18

INTERIMS

Currys , FRP Advisory Group

INTERIM EX-DIVIDEND DATE

JPMorgan European Discovery Trust, Northern 2 VCT, Northern 3 VCT, Northern Venture Trust, Pharos Energy , Templeton Emerging Markets Inv Trust, United Utilities Group

QUARTERLY EX-DIVIDEND DATE

Law Debenture Corp., Mercantile Investment Trust (The), Real Estate Investors

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Consumer Price Index (US) (13:30)

Continuing Claims (US) (13:30)

Initial Jobless Claims (US) (13:30)

FINALS

Chesterfield Special Cylinders Holdings

SPECIAL EX-DIVIDEND DATE

Pembroke Vct B, Zegona Communications

EGMS

Weiss Korea Opportunity Fund Ltd Npv

AGMS

Jarvis Securities, Macau Property Opportunities Fund Ltd., Pipehawk, URU Metals Ltd. (DI)

UK ECONOMIC ANNOUNCEMENTS

BoE Interest Rate Minutes (12:00)

FINAL DIVIDEND PAYMENT DATE

Craneware, Tristel

FINAL EX-DIVIDEND DATE

Barings Emerging Emea Opportunities , Smart (J) & Co., Topps Tiles, Town Centre Securities