Leading shares have perked up a little after better than expected US inflation figures. The FTSE 100 is now 46.3 points higher at 5738.7, with analysts saying the benign consumer prices numbers will give the Federal Reserve more room for manoeuvre on interest rates when it meets next week.
James Knightley at ING said: "The US consumer prices index is well below expectations at 0% month on month for both headline and core - the consensus was
0.3% and 0.2% respectively. [They make] a 75 basis point rate cut next week look even more likely. Nonetheless, inflation will remain a nagging threat, particularly with oil prices at record levels, which will result in significant fuel increases over the next couple of months."
And closer to home there came the worrying news that three month libor - the rate at which banks lend to each other - rose from 5.84% to 5.93%, its highest level since the start of the year.
David Buik at Cantor Index said: "Just in case any of you think the authorities have done enough, by pumping a degree of liquidity in to the market, libor is forecast to be 6% on Wednesday 19th March (futures maturity). The banks have zipped their pockets up and money markets are clean out of confidence, as we head towards the end of the quarter with billions of pounds worth of loans up for renewal."
