Lloyds share price has remain subdued in the past week as investors prepare for the Bank of England’s interest rate decision.

Having previously rallied on expectations of a rate hike in December, the discovery of the Omicron variant has all but put pay to hopes of a rate hike this week.

This has caused negative price action in Lloyds shares as the prospect of higher rates is generally considered to provide a boost to banking profitability.

Lloyds shares are one of the most actively traded stocks on the London Stock Exchange and are a good bellwether for overall sentiment of equity traders.

With Lloyds shares falling into the announcement, it is clear equity markets are positioning for rates to be kept on hold, and a prolonged period of near-zero rates.

However, with UK inflation data soaring 5.1% in November, it really does put the Bank of England in a difficult position.

“The most interesting part of all of this is whether the Bank of England will raise rates this week on the back of this data. Having inflation running at 5.1% and interest rates at 0.1% doesn’t seem like the most sensible idea and people could make the case they are failing in achieving their mandate,” said Dan Boardman-Weston, CIO at BRI Wealth Management.

“The decision is finely balanced though as large parts of this inflationary pressure are outside of their control and moving rates higher won’t help. When this is coupled with the emergence of Omicron, the decision is on a knife edge. They may decide to hold fire until they have further clarity on the impact Omicron has on health and wealth.”

Analysts also questioned the overall strength of the UK economy and pointed to the robustness of recovery as a further headache for the BoE.

Faced with such a high inflation reading, coming in at 5.1% and with forecasts that the only way is up, the Bank of England would ordinarily be expected to call time on the cheap money party and raise interest rates. But here's why it's looking unlikely to happen tomorrow 👇

— Susannah Streeter (@StreeterNews) December 15, 2021

Despite the drop going into the Bank of England meeting, the Lloyds share price is still up 23% YTD.

Aeorema Communications, the live events agency, has said it expects first half revenue to be the highest on record in a strong period of trading.

The company said revenue was expected to be £4.5m in a trading statement released on Tuesday. This will be a dramatic improvement on last year’s sales in which the company reported just £5.1m for the year ended 30th June 2021.

Aeorema Communications shares jumped over 30% to the highest level since 2015.

Aeorema provides event solutions through their Cheerful Twentyfirst division and counts Google, BBC, Vodafone and the Wall Street Journal as their clients.

The pandemic ravaged their business in 2020 as numerous events were cancelled and customers held off new bookings. The reversal in revenue will pay testament to their ability to pivot to the new environment of remote working and virtual engagement.

Aeorema also announced the appointment of Hannah Luffman to the board of directors in the newly created role of Group Commercial Director. Luffman was previously Aeorema’s Strategy Director having successfully founded Unicorn Events, achieving significant revenue growth in a short period.

The FTSE 100 continued along the Omicron rollercoaster on Tuesday with Londons leading index rebounding from Monday’s losses.

However, the gains were mild with the FTSE 100 adding 0.29% to trade at 7,251, at the time of writing, as investors await results of major central bank meetings this week.

“The FTSE 100 was off to a strong start on Tuesday, recovering some of yesterday’s losses as investors await the big central bank action to come this week and as concern over the Omicron variant continues to wax and wane,” says AJ Bell investment director Russ Mould.”

Highlighting the conundrum for central banks, Mould alluded to the ‘good news is bad news’ sentiment around UK jobs data that showed wage rises.

“More signs of a tightening jobs market may be good news for employees but could also add to inflation concerns ahead of the Bank of England’s meeting on Thursday.”

“However, a move on rates looks unlikely given the uncertainty over the economic impact of Omicron,” Mould said despite the Bank’s governor saying it didn’t see Omicron as a ‘stress event’.

FTSE 100 movers

BT was the FTSE 100’s biggest faller as investors sold the stock on perceptions the chance of a takeover bid was diminishing.

“News that French telecoms tycoon Patrick Drahi’s firm Altice had boosted its stake in BT seems to have provoked consternation in the market, with the shares slumping, potentially amid some disappointment that a full bid doesn’t look to be forthcoming, at least in the short-term,” said Mould.

Ocado topped the FTSE on Tuesday morning after the online retailer said they expected a strong Christmas.

“Ocado Retail is predicting a merry Christmas, underpinned by strong demand, but the new year poses some more challenging questions. Labour shortages, cost inflation, another round of ramped up capital spending, and fierce competition all spring to mind,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.