British investors await BoE's explanations

British investors in the week ahead will pay careful attention to an explanation from the Bank of England of its decision to maintain interest rates an historic low at a time of increased inflation pressure. The FTSE 100 index ended the week Friday at 5,881.75 points, a gain of 1.01 percent from its close a week earlier.
But the upward trend is fragile, analysts warn, in an uncertain economic context ahead of a hike in value added taxes that threatens to weigh heavily on economic momentum. The Bank of England's monetary policy is now under intense scrutiny following a report last Tuesday that annual inflation came to a higher-than-expected 3.3 percent in November.
Analysts had forecast no change, according to Dow Jones Newswires. The annual reading was also far above the Bank of England's target rate of 2.0 percent and could see the BoE deciding to raise interest rates from record-low levels sooner than expected, some economists warned.
Investors and analysts will get an insight into the Bank's thinking when minutes of the last meeting of its Monetary Policy Committee are published on Wednesday. The committee since March 2009 has held its benchmark interest rate at 0.50 percent while injecting 200 billion pounds (310 billion dollars, 235 billion euros) into the economy through asset purchases, part of an initiative to stimulate growth.