In her opinion that could trigger the need for interest rate increases in the U.K. from their current historic lows of 0.5% sooner than market expectations of the middle of next year. “I wouldn’t be surprised if inflation falls more sharply in the short term, but then as growth picks up, the growth effects boost inflation more in the medium term,” she said.
Speaking at the World Economic Forum in Davos, Switzerland on Sunday, BoE Governor Mark Carney said that signs of growth in wages would help the Bank of England avoid a deflationary spiral. He said: “We have the responsibility, we have the means and the will to… return inflation back to target within the two-year horizon.”
Focus of tomorrow's European part of the session will be on UK GDP data. 0.6% growth is forecasted. Also, BBA Mortgage Approvals data is scheduled for a releases. No significant change is anticipated. US session will be marked by Durable Goods Orders, CB Consumer Confidence and New Home Sales figures. Analysts predict 0.6% rise both in Durable and Core Durable Goods Orders. Increase is also expected in consumer confidence data to 95.3. New Home Sales are predicted to show a figure of 452,000.
Figures to watch:
BBA Mortgage Approvals (Tuesday 10:30)
Prelim GDP (Tuesday 10:30)
Durable Goods Orders /Core Durable Goods Orders (Tuesday 14:30)
CB Consumer Confidence (Tuesday 16:00)
New Home Sales (Tuesday 16:00)
