The report, which will lay out the central bank’s economic forecasts and provide guidance on the future path of interest rates, comes hot on the heels of inflation figures out yesterday, which revealed the lowest reading since September 2012.

UK inflation, as measured by the consumer price index (CPI), fell to 2.2% in October from 2.7% a month earlier, the Office for National Statistics said, driven by the biggest fall in transport prices since July 2009. Economists had forecast a reading of 2.5%.

CPI inflation is now running considerably closer to the BoE’s target of 2% – which it has exceeded since December 2009 – and well below its estimate for price rises to be at least 2.8% for the rest of 2013.

Analyst Blerina Uruçi from Barclays said its possible that the BoE’s projections today will show CPI inflation hitting the 2% target sooner than envisaged in the August Inflation Report (first quarter of 2015) and to undershoot it in the medium term.

“With price pressures softer, the inflation knock outs of the forward guidance framework now appear to be significantly less at risk than at the time of its announcement in August.

“This puts the Monetary Policy Committee (MPC) in a more comfortable position as it suggests that as growth picks up it is less likely to be concerned that inflation pressures will build up in the economy, even though labour market data show the unemployment rate falling faster than the MPC anticipated in August.”

The unemployment rate for the third quarter is due on Thursday before the inflation report and is expected to hold steady at 7.7%.

SSE and Sainsbury gain after results

British utility group SSE posted an 11% fall first-half adjusted profits reflecting “difficult” energy market conditions, but shares still managed to edge higher early on.

Supermarket firm Sainsbury also rose after boasting of its largest market share for a decade in the first half, helped by fast growth from its own-brand food and an even faster growth of non-food.

Sector peer Tesco however was trading in the red after HSBC downgraded the shares to ‘neutral’. Vodafone and CRH, both of which impressed with results on Tuesday, were pulling back as Beaufort Securities cut its ratings for the two stocks to ‘hold’.

London Stock Exchange fell after underwhelming investors with a 44% rise in revenue for the first half with growth across all divisions.

Oil producer Tullow Oil was also lower despite saying it is confident of exiting 2013 with output at record levels after “strong production across the group” in the third quarter. Oil majors BP and Shell were also out of favour.

Source: ShareCast