inflation could fall sharply later this year might have been welcomed by bulls.
Falling energy prices are one factor; and meanwhile, the news that Gordon Brown is still intending to keep public sector pay hikes below 2% this year should please the Bank.
Of course, intending to do something and actually achieving it are two entirely different things. And it seems that public sector workers aren't willing to endure below-inflation pay rises this year, for the greater good or otherwise - at least, not without a fight
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With the entire UK economy built on cheap borrowing, and low rates, the Chancellor is determined to make sure that public sector wage hikes don't push up inflation this year and give the Bank of England more of an excuse to raise rates.
To take the health sector as an example, nurses are being awarded a 2.5% pay rise for this year, payable in two stages in April then November, which they say effectively makes it 1.9%. GPs will get no rise at all, consultants will get 1.3% and junior doctors will get 3%.
With the Retail Price Index - generally considered the most effective measure of the cost of living - rising at 4.2% a year, that means anyone working in the NHS will almost certainly effectively be seeing a pay cut this year.
Gordon Brown said that "the overall awards come within the inflation target at 1.9%, demonstrating our total determination to maintain discipline and stability and continue with an 11th year of sustained economic growth."
But we'll be interested to see how much discipline and stability is around when the unions start asking their members how they feel about getting below-inflation pay rises.
The Transport and General Workers Union called the pay rises "a slap in the face". TUC General Secretary Brendan Barber got in the usual irrelevant self-righteous dig at management, saying "if pay is feeding into inflation, the chancellor should look to City bonuses and top boardrooms for culprits."
To be fair, it's the first year in a long time that public sector workers have felt any form of squeeze - the increases are the lowest in the past 10 years, and up until now, most NHS workers have done rather nicely out of all the extra money that the Chancellor has splurged on the health service.
But that's not likely to make the prospect of a slowdown this year any more palatable - to the NHS or any other public sector group. The leaders of Unison, the Transport & General and the GMB unions have already demanded a rise of 5% for 1.3m local government workers this year, says The Independent, and "warned of industrial action if Gordon Brown attempted to impose his artificial, unrealistic and foolish' pay curb."
Overall, it seems as if Ms Lomax's upbeat view of inflation may well be overly optimistic (as most commentators have been for the past few years) - and it's not just union chest-beating the Bank has to worry about.
UK manufacturing growth in February was the strongest since 2004, with manufacturers raising their prices by the most since 1999. This strengthens "the case for a rate hike in March," said Chiara Corsa of Spanish bank Unicredit to Bloomberg. The rise in selling prices shows that "inflationary pressures are rising and the Bank of England can't wait if it wants to act pre-emotively."
And regardless of attempts by estate agents to suggest that the latest interest rate rises are having some impact on the housing market, the latest data on home loan approvals suggests that the market remained strong in January, with lenders approving 120,000 loans for house purchase.
So it looks as though the March interest rate decision, due next Thursday, could be another nail biter.
Before we go, just to let you know - MoneyWeek will be featuring on ITV's Tonight programme this evening at 8pm, where editor Merryn Somerset Webb will be talking about the UK housing market. If you'd like to hear more on Merryn and MoneyWeek's take on UK property, be sure to tune in.
Turning to the stock markets
In London, a late rally was not enough to cancel out early losses on the stock market yesterday. The FTSE 100 closed down 54 points - at 6,116 - as miners and insurers weighed. For a full market report, see: London market close
On the other side of the Channel, the Paris CAC-40 closed 57 points lower, at 5,458, whilst the DAX-30 closed 29 points lower at 6,744.
Across the Atlantic, US stocks closed weaker, although off earlier lows. The Dow Jones ended the day 34 points lower, at 12,234. The tech-heavy Nasdaq was down 11 points, at 2,404. And the broader S&P 500 was 3 points lower, at 1,403.
In Asia, the strong yen weighed on Japanese exporters, sending the Nikkei 235 points lower to end the session at 17,217.
Crude oil was heading higher this morning, last trading at $62.14. In London, Brent spot was up 20 cents at $61.27 a barrel.
Spot gold was last quoted at $659.00/oz whilst silver was trading at $13.62 today.
And in London this morning, pub chain Wetherspoons announced a 20% rise in first-half-profit - fuelled by sales of breakfasts and coffee - and increased its dividend by 150%. Meanwhile, casino owner Rank reported its first annual profit for three years following sales of loss-making units.
And our two recommended articles for today...
Ignore gold investment myths - and look to the Fed
- There are certain reasons the pundits often give for gold price rises: oil, inflation, the commodities bull market. But are any of these true? asks Adrian Ash. To find out which trend you should be watching, read: Ignore gold investment myths - and look to the Fed
Why China is the key to the commodities market
- Recent pull-backs in commodities prices have got investors wondering whether the bull market has come to an end. It all depends on China, says Chris Mayer. For more on why this bull has plenty more years left to run, see: Why China is the key to the commodities market
John is the executive editor of MoneyWeek and writes our daily investment email, Money Morning. John graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.
He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news. John joined MoneyWeek in 2005.
His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.
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