The European Central Bank stood pat on its interest rate decision on Wednesday, despite some speculation it might go for a rate cut, and now attention turns to the Bank of England, to see whether it will maintain the status quo.
Last month, the situation was said to be finely balanced on whether to pour yet more money into the Bank of England's asset purchase scheme (also known as quantitative easing, or QE).
This month things are likely to be made trickier still by the fact that the MPC, which is scheduled to announce its decision on its key interest rate and QE on Thursday at noon, will not know the outcome of the Greek General Election, scheduled for June 17th.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The outcome of that could have such a distorting effect on other European economies that the MPC may well be advised to add an experienced bookie or psephologist to its team, to try to predict the result.
Some pundits have even suggested that a reduction in the interest rate is a possibility, even though the rate is at an all-time low of 0.50%.
The majority of economists, however, seem to be expecting the status quo to be maintained, but it could be a close run thing.
"The economy remains weak, but the MPC's propensity to expand QE is hard to gauge. Taken at face value, the May Inflation Report projections indicated a clear bias to loosen, while the minutes of the May meeting reported that 'several' members thought the decision to halt QE was 'finely balanced'. This would suggest that the bar to more QE is relatively low," BarclaysCapital (BarCap) notes.
"However, the MPC has stressed that the Inflation Report projections should not be taken too literally as a guide to policy, and most MPC members have said recently they are content with the current policy setting. The implication is that, in the words of BoE Deputy Governor Bean, the economic outlook would have to 'deteriorate significantly' before more QE was considered," BarCap noted.
"The MPC has recently taken comfort from the fact that the main business surveys have pointed to stronger activity than have the official data. The sharp drop in the manufacturing PMI [Purchasing Managers' Index] in May is therefore an important piece of news as it suggests the fundamental underpinnings of activity may actually be rather weak. If the services PMI (published on Thursday morning) were to show a similarly precipitous fall, the MPC is likely to give serious consideration to a QE expansion. However, if the services PMI were to drop in line with our expectation (Barclays 51.5, consensus 52.5) we would expect the MPC to hold fire to see how the subsequent data evolve," BarCap said.
On the corporate front, platinum refiner Johnson Matthey issues full year results on Thursday. Market expectations are for profit before tax of £405.1m on revenue of £11,213m. Earnings per share are seen rising to 143.85p, paving the way for an increase in the full year dividend to 52.94p.
"Expectations for group performance are for 2H [second half] slightly ahead of 1H2012," reveals Charles Stanley analyst, James Dawson.
"The outlook statement will be significant to gauge management's assessment on whether it anticipates any change to trading patterns, most probably expressed on a geographic basis," Dawson added.
INTERIMS
RWS Holdings
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Bloomberg Consumer Confidence (US) (14:45)
Consumer Credit (US) (20:00)
Continuing Claims (US) (13:30)
Initial Jobless Claims (US) (13:30)
FINALS
Johnson Matthey, Real Estate Credit Investments PCC Ltd, Synergy Health, WYG
IMSS
Integra Group GDR (Reg S)
SPECIAL DIVIDEND PAYMENT DATE
Old Mutual
EGMS
Ashmore Global Opportunities Ltd GBP Shares, Bwin.party Digital Entertainment
AGMS
Ashmore Global Opportunities Ltd GBP Shares, Bwin.party Digital Entertainment, Camellia, Cayenne Trust, Corero Network Security, G4S, Golden Prospect Precious Metals Ltd., Himalayan Fund NV, Lamprell, Longships, Melrose Resources, Netplay TV, Oxford Biomedica, PowerFilm Inc. (Reg S), Tower Resources, Ukrproduct Group Ltd., Waterlogic
UK ECONOMIC ANNOUNCEMENTS
BoE Interest Rate Decision (12:00)
BRC Sales Monitor (00:01)
PMI Services (09:30)
FINAL DIVIDEND PAYMENT DATE
H&T Group, Konami Corp., Old Mutual, Rexam
JH
Review: Eden Roc Cap Cana – fun, sun and golf in the Caribbean
Reeves delays cash ISA reform, but savers are not out of the woods yet
