Yesterday Mark Carney said the UK inflation rate will probably hit the Bank’s target, of 2%, this month due to the 18% depreciation in the value of the pound since June. With inflation expected to peak at 2.8% in 2018.
It seems the BoE forecasts need to be taken with a grain of salt as there were further revisions to growth expectations, with new forecasts showing that it expected the economy to grow by 2% in 2017. A growth upgrade by the Bank from November’s 1.4% forecast and was drastically higher than last August's forecast of growth of just 0.8% in 2017
It was also reported yesterday that Government borrowing recorded the biggest January surplus since 2000 of £9.4bn and its lowest year-to-date reading since the financial despite a lower-than-expected monthly surplus .The surplus was still not as high as economists had predicted, falling significantly lower than consensus expectations of a £14.4bn surplus during the month. Nevertheless, the government is still on track to outperform the official forecasts from the Office for Budget Responsibility.
Eurozone private sector and manufacturing growth unexpectedly accelerated to near a six-year high in February and job creation reached its fastest since August 2007, pushed by strong demand and optimism about the future.
Markit's eurozone flash composite Purchasing Managers' Index rose sharply to 56.0, the highest since April 2011, from 54.4 in January, confounding expectations for a slight dip to 54.3.
The acceleration, showed France's momentum getting close to Germany's, and if this is sustained, economic growth could hit 0.6 percent in the first quarter.
09:30 – GBP: UK Preliminary GDP Q4 – expected to remain unchanged at 2.2%
19:00- USD: FOMC Meeting Minutes