Sharecast - The FTSE 100 was called to open 45 points lower at 7,514.
Data released by the Office for National Statistics on Wednesday showed that consumer price inflation was steady at 8.7% in May versus expectations for a decline to 8.4%. Meanwhile, core inflation rose to a 31-year high of 7.1% from 6.8% in April. Analysts were expecting it to be unchanged.
CMC Markets analyst Michael Hewson said: "Up until yesterday’s CPI number markets were predicting with a high degree of certainty that we would see a 25bps rate hike from the Bank of England later today.
"That certainty has now shifted to an even split between a 25bps rate hike to a 50bps rate hike after yesterday’s sharp jump in core CPI to 7.1% in May.
"As inflation readings go it’s a very worrying number and suggests that inflation is likely to take longer to come down than anticipated, and even more worrying price pressure appears to be accelerating, in contrast to its peers in the US and Europe where prices now appear to have plateaued.
"This has raised the stakes to the point that the Bank of England might feel compelled to hike rates by 50bps later today, and not 25bps as expected.
"Such an outcome would be a surprise from the central bank given their cautious nature over the years, however such has been the strong nature of recent criticism, there is a risk that they might overreact, in a sign that they want to get out in front of things.
"Whatever they do today it’s not expected to be a unanimous decision, but the surge in core inflation we’ve seen in recent months, does make you question what it is that Swati Dhingra and Silvana Tenreyro are seeing that makes them think that the last few meetings were worthy of a no change vote."
Rate announcements are also due from the Swiss National Bank and Norges Bank.
In corporate news, packaging specialist DS Smith posted an "excellent" set of full-year results despite what it termed as a "challenging economic environment".
For the 12 months through 30 April, the company posted an 11% jump in revenues to £8.2bn on a reported basis. Adjusted profits before tax on the other hand soared 75% to £661m, for a 40% surge in its adjusted basic earnings per share to 43.0p. In turn, the full-year dividend payout was raised by a fifth to 18.0p.
Investors will also be mulling a trading update from Premier Inn owner Whitbread (LON:WTB).
