Thanks for joining me. The Bank of England is widely expected to keep interest rates on hold later today amid global uncertainty and surging food and oil prices.
Most economists think the majority of the members of the Monetary Policy Committee MPC, which sets borrowing costs, will vote to keep the Bank Rate at 4.25pc.
The MPC has voted to cut rates at every other meeting since it started easing borrowing costs last August, from a peak of 5.25pc.
However, official figures on Wednesday showed inflation remained persistent at 3.4pc in May, which is well above the Bank of England’s 2pc target.
Food prices surged during the month at the fastest pace since February last year, the data showed, just as the conflict in the Middle East triggered a spike in the price of oil.
Meanwhile, policymakers must also consider the potential hit to global growth from Donald Trump’s tariff regime and the risks it poses to inflation.
Monica George Michail, associate economist for the National Institute of Economic and Social Research Niesr said the institute was forecasting inflation to remain above 3pc for the rest of the year amid “persistent wage growth and the inflationary effects from higher Government spending”.
“Additionally, the current tensions in the Middle East are causing greater economic uncertainty,” she said.
“We therefore expect the Bank of England to keep rates on hold this Thursday and implement just one further cut this year”.
Sandra Horsfield, an economist for Investec, added: “The risk to energy prices has clearly intensified and moved up the agenda given developments in the Middle East.
“It seems unlikely the MPC will want to change policy rates this week.”
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What happened overnight
Asian shares retreated amid ongoing worries about conflict in the Middle East.
Ratcheting up tensions, President Donald Trump warned of the possibility of getting directly involved in the conflict with Israel, while Iran’s supreme leader rejected U.S. calls for surrender.
In Asian trading, Japan’s benchmark Nikkei 225 shed 0.9pc to 38,554.98. Shares in Japan’s Nippon Steel rose 3pc after it announced that its acquisition of US Steel, which met with American government opposition for more than a year, was finally completed.
Hong Kong’s Hang Seng dropped 1.8pc to 23,294.85 on heavy selling of tech-related shares, while the Shanghai Composite lost 0.6pc to 3,368.16.
Australia’s S&P/ASX 200 was little changed at 8,529.60 and in South Korea, the Kospi lost 0.1pc to 2,969.75.
US financial markets will be closed Thursday for the Juneteenth holiday.
On Wednesday, US stocks drifted to a mixed finish after the Federal Reserve indicated it may cut interest rates twice this year, though it is far from certain about that.
On Wall Street, the S&P 500 was flat, at 5,980.87, the Dow Jones dropped 0.1pc, to 42,171.66, and the Nasdaq added 0.1pc, to 19,546.27.
In the bond market, the yield on 10-year US Treasury notes dipped to 4.396pc from 4.405pc a day earlier.,
