The Bank of England's (BoE) last minutes and quarterly inflation report struck a decidedly dovish tone. However a lot has happened since then. Consequently investors will be eager to see if recent developments have pushed back expectations for an interest rate rise over at the Old Lady.
Will the hawk still squark?
With the BoE widely expected to hold the main interest rate at 0.5 per cent, attention will centre on whether there was any change from the 8-1 vote that occurred last month. But that was before the slowing Chinese economy sparked a global market meltdown and oil prices entered a renewed rout. As such, it remains to be seen whether dissenter Ian McCafferty will remain in favour of a rate hike, or instead huddle with the doves.
The slowing Chinese economy
BoE governor Mark Carney recently said that the slowdown in the Chinese economy wouldn't affect the path of interest rates. He said the committee's current strategy, balancing the strength of the UK economy with low inflation and weak global demand, was unchanged by recent global market volatility. And tomorrow's minutes should reveal whether the other eight members of the monetary policy committee agree.
How the UK economy is faring
Recent economic data and surveys suggest that growth may have slowed in the third quarter of this year. A measure of the services sector for August fell to its lowest level in over two years. Manufacturing, construction, as well as industrial production have also been disappointing. Investors will want to see how policymakers square this against a darkening global economic backdrop.
How low can inflation go?
Threadneedle Street's August inflation report cut its inflation forecast from 0.6 per cent this year, to 0.3 per cent, amid low global oil prices and the strength of the sterling. Since then, oil prices suffered a renewed rout, falling below $45 per barrel. This is particularly interesting, given McCafferty and Martin Weale reversed their calls for a rate hike in January, amid low oil prices and the effect of this on inflation.
New kid on the block
Gertjan Vlieghe, who took over from David Miles as an external member of the MPC, will make his first appearance tomorrow. He has significant financial market experience, having been a partner and economist at hedge fund Brevan Howard Asset Management, and a director at Deutsche Bank. However economists think Vlieghe is unlikely to vote for an interest rate rise at his first meeting.