The most recent monetary meeting minutes and the August Bank of England Inflation Report also suggest a softening in the Governor's attitude. While he continued to advice a tightening of monetary policy to be certain of achieving the inflation target, he recognised that the policy dilemma has now become more acute. On balance, interest rates are likely to remain on hold until the direction of fiscal policy is confirmed in this year's budget.
The publication of UK industrial production data for July on Wednesday will also generate some interest. Output slowed much more sharply than expected in June. However, some recovery is expected, reflecting increased energy production, as oil and gas supply rebound from an exceptionally large summer maintenance programme.