UK official forecasts revised

The UK budget continues to indicate a squeeze on public spending in the coming years, though the impact of low oil prices and rising real earnings should underpin growth. 

Updated forecasts from the Office for Budget Responsibility (OBR) indicate an upgraded GDP growth outlook for 2015 and 2016, of 2.5% and 2.3%, respectively. 

From the perspective of monetary policy, above-trend growth rates raise pressure for higher interest rates. 

But the latest labour-market data threw some doubt on how quickly earnings growth will accelerate: minutes from the Bank of England's March meeting indicate that a further sustained increase in labour-cost growth would probably be necessary for inflation to rise to the 2% target in the medium term.