The week ahead

Over the weekend, amid speculation that the Bank of England could raise interest rates as soon as May, Chief Economist Andy Haldane said that there is “no rush” to tighten policy further.

Bank of England speakers are the key focus today in an otherwise quiet calendar. Following last week’s hawkish signals from the Bank of England and the seemingly less hawkish comments from its Chief Economist Haldane at the weekend, MPC members Vlieghe and McCafferty are scheduled to speak today.

The main data releases this week are the UK and US January CPI inflation figures on Tuesday and Wednesday, respectively.

We anticipate UK headline CPI to remain well above target at 3.0%, while small declines in both US headline and core CPI may alleviate some fears of a quicker pace of Fed policy tightening. UK and US January retail sales are also due later in the week.

In the Eurozone, the main focus is likely to be on a number of ECB speakers, including Weidmann, Praet, and Coeure. The first estimate of German Q4 GDP is due on Wednesday.

A series of “Road to Brexit” by UK Cabinet ministers will be a key focus. Globally, the recent sharp rise in market volatility was likely to be related to the potential return of inflation and fears of a more rapid pace of monetary policy tightening.

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