On Thursday, the Bank of England (BoE) will make its decision on interest rates and its asset purchase programme. Look out for flying pigs if the BoE changes its key interest rate, which has been at its historically lowest ever level since March 2009.
Most economists expect the BoE's Monetary Policy Committee (MPC) to stand pat on its asset purchase programme (quantitative easing). Economists at Barclays Capital (BarCap) believe that "the current asset purchase programme will take another two months to complete, and in the absence of a major shift in the economic outlook we think it unlikely that the MPC will adjust its stance before it meets in May. At that point, we expect a halt in asset purchases, but given the patchiness of the recovery, there remains a reasonable chance that quantitative easing (QE) will be extended further.
Whether the recent pronouncement by the Organisation for Economic Co-operation and Development (OECD) that the UK has slipped back into recession counts as "a major shift in the economic outlook" of the sort Barclays Capital is referring to is unknown, but so far as the OECD's chief economist, Pier Carlo Padoan, is concerned, Britain should embark on more quantitative easing "sooner rather than later".
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The smart money still remains on the BoE's Monetary Policy Committee disagreeing with the France-based think tank, though it is worth noting that the minutes of the March meeting showed that two members voted for an additional £25bn to be added to the asset purchase programme.
However, as BarCap points out, recent inflation indicators have been stronger than expected, making the case for more policy loosening far from clear cut. Furthermore, the UK Purchasing Managers' Indices released this week were better than expected and point to stronger activity.
"The MPC must therefore weigh the need for more stimulus against the potential credibility cost of loosening policy once more when inflation remains some way above target. The marginal voters on the committee are likely to consider an extra month's worth of data to be valuable for this assessment, making a deferral until May an attractive option," BarCap concludes.
On the corporate front, car and bike parts retailer Halfords will update on trading in the final quarter of its financial year, and shareholders will hope that the alarming acceleration in the rate of sales decline seen in the third quarter has been arrested.
The main Halfords Retail division saw the fall in revenue speed up in the third quarter to 4.4% from the 1.6% decrease in the first half, with the car maintenance and enhancement ranges losing popularity.
Margins were also under pressure, with the group forecasting gross margin in the UK and the Republic of Ireland for the full year would be 1.3 to 1.5 percentage points lower than the year before.
By contrast, cash and carry operator Booker has been having a good time of it.
Booker's like-for-like (LFL) sales rose by 6.7% in the 16 weeks to December 30th from the corresponding period of 2010, with customer numbers and average spend per customer both up year-on-year.
Non-tobacco LFL sales rose by 5.8% and tobacco LFL sales by 7.6%. Total sales in the quarter were up 7.0% on the same quarter of 2010, with fruit and vegetable sales up 17%.
Investors will be looking for more details on the firm's expansion into India, and updates on its new Chef Direct service aimed at the catering trade.
INTERIMS
Victrex
INTERIM DIVIDEND PAYMENT DATE
JPMorgan Mid Cap Inv Trust, Mid Wynd International Inv Trust
QUARTERLY PAYMENT DATE
British Assets Trust
QUARTERLY EX-DIVIDEND DATE
Verizon Communications
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Bloomberg Consumer Confidence (US) (14:45)
Continuing Claims (US) (13:30)
Industrial Production (GER) (11:00)
Initial Jobless Claims (US) (13:30)
PMI Construction (GER) (08:55)
AGMS
OJSC LSR Group GDR (Reg S)
TRADING ANNOUNCEMENTS
Booker Group, Halfords Group
UK ECONOMIC ANNOUNCEMENTS
BoE Interest Rate Decision (11:00)
New Car Registrations (09:30)
FINAL DIVIDEND PAYMENT DATE
Throgmorton Trust
Q1
Sandvine Corp.
JH
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