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ANNEX: SUMMARY OF DATA PRESENTED BY BANK STAFF

A1 This Annex summarises the analysis presented by the Bank staff to the Monetary Policy Committee on 7 January, in advance of its meeting on 12-13 January 2000. At the start of the MPC meeting itself, members were made aware of information that had subsequently become available, and that information is included in this Annex.

I

The international environment

A2 The global economy had continued to strengthen. Growth in the United States and in the euro area had been robust in Q3; the Japanese economy however remained fragile. There had also been further signs of a strengthening of the recovery in Asia and a turn around in Latin America. But it was not yet clear whether some of the strength in activity in Q4 was related to Y2K effects, which would be unwound in 2000, or reflected more permanent developments. There were still few signs of global inflationary pressure. Oil prices had fallen back somewhat in early January from the levels achieved in November and December. Interest rates implied by futures contracts had increased in the United States, Japan and the euro area since early December. A3 US GDP growth in Q3 had been revised up further on an annualised basis, but the quarterly growth rate was unchanged. Investment growth in Q3 had been revised down to 1.7% from 2.0%. Investment in equipment and software had been strong in Q3, increasing by 3.7%. Consumer confidence had risen to 141.4, the highest since its all-time high of 142.3 in October 1968. Consumer confidence had been positively correlated with equity prices in recent years. US non-farm payrolls had risen 315,000 in December after a rise of 222,000 in November; the unemployment rate had remained at 4.1%. Annual consumer price inflation had remained at 2.6% in November, although core CPI inflation had risen to 2.2% from 2.1%. A4 Euro-area GDP had risen by 1.0% in Q3. Final domestic demand and net trade had both made significant positive contributions to the rise in GDP. In the three largest euro-area economies (Germany, France and Italy) there had been a similar pattern of quarterly growth in Q3. Euro-area industrial confidence had increased in December, while consumer confidence had remained unchanged. German industrial production had increased 2.0% in the year to November, following an increase of 1.3% in the