You should have started to notice a drop in petrol prices, which is a reflection of what is currently happening in the oil market. Three OPEC members, Libya, Iran and Saudi Arabia have significantly increased output – usually Saudi Arabia acts as the counter balance to over supply but industry commentators believe the increase in production is a deliberate attempt to make US shale exploration uncompetitive. A more extreme view is that increased oil production is punishment to Russia.
In Europe the Central Bank (ECB) has apparently received approval to proceed with a Quantative Easing (QE) programme whereby the ECB will purchase €1 trillion of assets. As Japan recently announced their own QE programme it was important that the ECB had a clear strategy – unfortunately the detail of that strategy is still not known.
In the UK there has been an increase in the number of jobs being created without appearing to be any impact on inflation. This made the publication of the Bank of England’s Quarterly Inflation Report an interesting read. This led to the anticipated inflation estimates being reduced and increased the unlikely scenario that there will be an increase in base rate in the short term.