On Wednesday, Mark Carney will present the Bank's latest Inflation Report. It's likely to point to strong growth, both recently and expected, as a reason for rates to rise. Friday's second estimate of second-quarter GDP will remind us of this, showing that the economy grew by 0.8 per cent in the quarter thanks to a big rise in consumer spending and perhaps in investment too.
On the other hand, the fact that inflation has been low recently might suggest there was more spare capacity in the economy a few months ago than the Bank thought. That's a reason to hold off raising rates. Right now, economists expect the first rise to come in November. Next week's report might not change this.
Other figures in the week might remind us why a rise isn't necessary yet. Although Wednesday should see another big drop in unemployment, the numbers will also tell us that wage inflation is still below 1 per cent. This means the labour market is not yet generating inflationary pressures.
News from the eurozone might also provide reasons not to raise rates. Thursday's figures should confirm that inflation in the region fell to 0.4 per cent last month, with Greece, Portugal and possibly Spain experiencing deflation. Low inflation in our main trading partner will hold down inflation here. What's more, growth in the region is also weak. Although Wednesday's figures should show that industrial production recovered in June after May's slump, output in the quarter might be no higher than it was in the first quarter. And GDP numbers the following day could show growth in the quarter of just 0.2 per cent. If such weak growth continues, it will hold back the UK's expansion.
In the US, meanwhile, the economy continues to grow reasonably. Retail sales on Wednesday and industrial production on Friday should both show rises in July, and the New York Fed's survey of manufacturing should suggest that this will continue.
One thing for investors to watch for will be Friday's capital flows numbers. These have recently showed a rise in foreign buying of US equities, which is a sign of increased investor confidence. In the past, such buying has been a predictor of lower annual equity returns in the UK. Continued buying would, therefore, be a sign of lower (but for now still positive) returns.
