With interest rates, it seems everybody is very sure a hike will or will not happen in a given timeframe one day, then the next day a piece of data or a comment from a monetary policy committee member prompts a rapid rewrite of the script.
The current confidence many have in there being many more months of MPC inaction through to mid 2016 comes in large part from the sluggish first quarter growth figures of 0.3% and the slip into a marginal deflation reading.
As has been widely pointed out though, the deflation reading is largely due to the exceptional situation with the oil price and the ongoing supermarket price wars, rather than a true reflection of demand and confidence.
The all-important consumer confidence level is rising fast. A survey published by research firm Nielsen last week revealed confidence is at a nine year high in fact, and it cannot be long until this is more widely translated into bolder purchasing decisions and loosening of purse strings.
This is likely to mean UK inflation is in the process of bouncing back strongly, providing there is not another big slide in oil and gas prices. With such data, it is important to remember that the publishing of the official numbers comes sometime later than the real world events they correspond to.
Economic growth is already accelerating in a way that will give the MPC cause to question their dovish stance more closely.
The CBI’s latest ‘Growth Indicator’ published on Sunday shows the UK economy has ‘raced ahead’ in the three months to May, reaching its strongest rate for a year.
