Britain’s housing boom surged again in February, with prices rising at their fastest rate in almost five years according to the latest survey from the Halifax building society. It reports that prices rose 2.4% last month, which is the biggest monthly rise since May 2009. The average home is now worth £179,872.
Economists had expected a rise of just 0.7%, and this leap reinforces fears that a bubble may be forming in the housing market
As expected the Bank of England left interest rates unchanged at 0.5% and also left its quantitative easing programme untouched at £375bn. Policy makers have indicated they will not raise rates until the recovery eats away at enough spare capacity in the economy and inflation starts to rise again.
The ECB also left interest rates unchanged at 0.25%
Draghi reiterated the ECB’s ‘forward guidance’ - where interest rates will remain at their present levels, or lower for an extended period. Inflation expectations in the medium and long term continue to be firmly anchored. Draghi also stated that the ECB remains determined to maintain the high degree of accommodative monetary policy for as long as needed, and will take further actions as it sees fit.
As a result we did see the euro strengthen considerably as the market had expected the ECB to take more accommodative measures to starve off the threat of deflation that was expected to further weaken the euro.
Greece’s unemployment rate has dropped slightly in December to 27.5%, down from 27.6% in January, but more than double the average for the Eurozone. The small decline was due to more people dropping out of the labour market altogether.
In the US initial jobless claims fell by 26,000 to 323,000 in the week ending February 28th, the lowest level since the end of November. Continuing Jobless claims also fell by 66,000. While these figures were positive, the US dollar failed to strengthen against the euro and the pound; possibly as the market is waiting for today’s non-farm payroll figures before deciding which direction to take the US dollar next.
13.30pm – USD – Nonfarm Payrolls (Feb): Expected to show an addition of 149,000.
13.30pm – USD – Unemployment Rate (Feb): Expected to remain at 6.6%.
13.30pm – USD – Trade Balance (Feb): The deficit is expected to widen to US$39bn.
13.30pm – CAD – Unemployment Rate (Feb): Expected to remain at 7%.