GBP

Bank of England Governor Mark Carney said policy makers can look beyond the
inflation slump and won’t wait too long before acting to return price growth to
target.  He stated that  the Bank Of England’s job is to
bring  inflation back to the 2 percent inflation target within a
reasonable horizon and should”be within the next two years.” 

The MPC has diverged on the possible timing of policy tightening from its

GBP

Bank of England Governor Mark Carney said policy makers can look beyond the
inflation slump and won’t wait too long before acting to return price growth to
target.  He stated that  the Bank Of England’s job is to
bring  inflation back to the 2 percent inflation target within a
reasonable horizon and should”be within the next two years.” 

The MPC has diverged on the possible timing of policy tightening from its
emergency setting as plunging oil prices drive inflation to a record low and
wage data show building work-force cost pressures.  Deputy Governor Ben
Broadbent said the next move in interest rates is likely to be an increase,
comments shared by MPC member Kristin Forbes at an earlier event on
Tuesday. 

Food and energy prices now account for three-quarters of the movement lower
away from target, compared with two-thirds when the BOE published its Inflation
Report in mid-February.

EUR
Eurozone finance ministers approved reform proposals submitted by Greece in
order to gain an extension of its bailout. The Eurogroup said it had
agreed to proceed with national procedures. The measures proposed by
Greece include combating tax evasion and tackling the smuggling of fuel and
tobacco.

However, International Monetary Fund head Christine Lagarde expressed some
reservations about the proposals saying “In some areas like combating
tax evasion and corruption I am encouraged by what appears to be a stronger
resolve on the part of the new authorities in Athens,” she wrote in a
letter to the Eurogroup. “In quite a few areas, however, including perhaps
the most important ones, the letter is not conveying clear assurances that the
government intends to undertake the reforms envisaged.”

Newly elected Greek Prime Minister Alexis Tsipras is trying to balance
satisfying the demands of creditors with meeting his pre-election pledges.

USD
The Federal Reserve is preparing to consider interest rate hikes “on a
meeting-by-meeting basis,” Fed Chair Janet Yellen told a congressional
committee on Tuesday in a subtle change of emphasis in how the U.S. central
bank has spoken about its plans for its first rate hike since 2006. Yellen
described how the Fed’s rate-setting policy committee will likely proceed in coming
months – an effort to increase the Fed’s flexibility and mute any potential
market reaction ahead of the “liftoff” date.

Yellen said she felt U.S. labour markets and other key economic indicators
“have been increasing at a solid rate.” However, she said she still
feels the job market is not fully repaired, and that the U.S. outlook remains
somewhat clouded by a weaker-than-hoped-for global economy, stalled wage
growth, and falling inflation.

The lack of inflation has made some Fed policy makers hesitant to commit to
raising rates until they are more certain the United States is not headed down
the same path as Europe or Japan, mature industrial economies that are
struggling to maintain growth.

Key Announcements:
GBP- 10:00 : Bank Of England Govenor Mark Carney makes a speech
USD- 15:00 :US Fed Chair Janet Yellen testifies 
USD- 15:00 :US New home sales (Jan) expected to fall from 481K to 477K
EUR- 16:30 : ECB President Mario Draghi makes a speech

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