Interest rates expected to hold steady

The Bank of England holds its latest interest rate meeting on Wednesday and Thursday with financial markets widely expecting the monetary policy committee to leave interest rates steady at 4.5% for the fourth consecutive month.

While the economy remains fairly sluggish, the committee is watching for any signs that high oil prices are feeding into higher wage demands in the upcoming pay round. With inflation still above its 2% target, the City expects borrowing costs to remain on hold for some months to come.

The British Retail Consortium will provide its latest snapshot of high street activity on Tuesday, with its shop-price index following on Thursday. The CBI last week reported the worst retail conditions in the 22-year history of its survey of retailing last week but the BRC has painted a less gloomy picture recently and may do so again this week.

Today sees a key survey on the wider services sector from the Chartered Institute of Purchasing and Supply. That has been fairly robust in recent months in spite of the weakness in retailing. Tomorrow brewer Greene King will publish interim results. The pubs and brewing group is expected to report a near 20% rise in profits to £53m.

Tour operator First Choice Holidays delivers full-year results on Thursday and is expected to unveil a 14% rise in profits to £112m. Bus group Stagecoach, however, is likely to reveal a slight dip in first-half earnings to £69m.

Others reporting include a number of water companies - including Severn Trent, Northumbrian, Bristol Water Group and Pennon.