So the big news yesterday was the speech made by Mark Carney. Carney has said he will now wait until the spare capacity in the economy is filled before he looks at raising interest rates. This is basically the gap between current output and where they think output could be. This is estimated to be 1-1.5% of GDP at present. This changes the goalposts on the previous forward guidance plan which centred on the unemployment rate breaching below a 7% threshold.
Also the Bank of England said it expects fourth quarter GDP growth will be revised up to 0.9% from the 0.7% estimated. It forecasts a similar pace of expansion this quarter. For the full-year 2014, it raised its projection to 3.4% from 2.8% in November.
The central bank sees inflation at 1.9% in three years, below its goal. Citing subdued global prices, falling commodity costs and strengthening of the pound.
The euro weakened off considerably yesterday. Basically a member of the European Central Bank stated they are seriously considering taking its overnight bank deposits into negative territory. This basically penalises banks for holding excess funds at the central bank and is meant to help kick start the flow of credit to households and businesses. Current lending to households and businesses fell 2.3% in December, the steepest drop in two decades.
There was also disappointing industrial production figures out in the Eurozone. The figure came in at growth of 0.5%, missing forecasts of 1.8%.
This morning we have also had data from Germany showing that the rate of inflation in the country has dropped from 1.4% to 1.3%
13.30pm – USD – Initial Jobless Claims: Expected to fall by 1,000.
13.30pm – USD – Retail Sales (Jan): Expected to fall to 0%.