The Bank of England monetary policy committee met last week. While interest rates were once again kept on hold at their historically low level and the quantitative easing programme was maintained, the Bank raised its growth forecasts significantly. Although the Bank of England has been consistently inaccurate with its forecasts, it is still encouraging to see a more optimistic outlook. The Bank’s full year forecast for 2017 was upgraded to 2% from the 0.8% it predicted just after the Referendum result. However, the growth is likely to be driven again by consumers drawing down their savings and taking advantage of low-interest rates to increase borrowing. Manufacturing is also likely to experience a boost from a weaker sterling, making British produced goods more competitive in domestic and overseas markets.

The Federal Reserve rate-setting committee also met last week. The headline interest rate was held the same and the Chair, Janet Yellen, gave little away regarding timings of any future rate rises. While the lack of clarity was disappointing to the market, it is widely anticipated that two or more rises will occur this year on the back of a strengthening economy. US employment figures came in strongly in January, with the economy adding 227,000 jobs. This was significantly more than the 180,000 predicted. However, average earnings growth slowed to an annual 2.5%, from 2.8% in December and beneath expectations. This confounded forecasters who expected a tightening labour market would increase pressure on companies to raise wages faster. Wage growth accelerating will be the primary metric the Federal Reserve will look at when considering rate rises.

The continuing battle between Trump and the judicial system over the attempted immigration ban has begun to rattle markets. While there has not been panic selling, equity markets are fluctuating on news flow from the Whitehouse. While it is likely that investors will begin to become desensitised to this type of news over time, the unpredictable nature of the president may continue to hang over markets.

The UK trade balance and manufacturing output figures will be released this week.