Asian markets were up last night - taking the lead from Wall Street - on the prospect of a Greek deal with the Troika and news of a ceasefire in Ukraine as well as a few surprise moves from some central banks.

Markets analyst Brenda Kelly said a few central banks have been cutting rates to counter the threat of deflation. "Sweden is the most recent to cut rates and it's embarking on QE, which will see it buy up its own sovereign debt. There is something of a race to the bottom taking place on currency markets. This is helping to keep risky assets like equities on the up," Ms Kelly explained. Yesterday, the Bank of England warned of possible deflation taking hold in the UK, but Brenda Kelly said the Governor was merely laying out an adverse scenario. "Mark Carney said there was no threat of persistent deflation in the UK and that inflation would probably rise again later in the year. Markets had got ahead of themselves in expecting no rate rises until late next year. Oil has a lot to do with it and we've seen big price drops in the past while but it has been seen as a positive thing that will support global demand and also support UK real income growth," she said. 

On Mr Carney's decision to abandon a pledge not to cut interest rates below 0.5%, the analyst said this was the bank allowing themselves some flexibility for any 'black swan' events. "If everything goes badly wrong, they're allowing themselves flexibility for any black swan events like the situation in Ukraine or Greece getting worse. The markets have addressed this and priced in an earlier interest rate rise on the anticipation of higher inflation," she said.

The Bank of England Governor also addressed the possibility of boosting the UK's quantitative easing programme in the event of it needing to. Brenda Kelly said this was part of the manoeuvres being made by central banks to weaken currencies to impact competitiveness and avert deflation. "If everyone is doing it, it does ruin the potential impact of QE. The US were first to embark on such a programme after the financial crisis. By getting ahead of the game, the US pushed ahead in terms of growth and employment. There is a certain race to the bottom going on and the effectiveness is small by comparison to where it would have been if you were the first to launch a QE programme," she concludes.

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MORNING BRIEFS -  Aer Lingus shares closed just over 3% higher - or up seven cent - at €2.25 yesterday after IAG chief executive Willie Walsh made his pitch to buy the airline at the Oireachtas Transport Committee. The share price is still a long way off the high of €2.50 reached just after IAG announced that it would be putting in a bid of €2.55 per share last month. Meanwhile, it looks like Ryanair's appeal to the British court finding telling it to reduce its shareholding in Aer Lingus could be a lengthy process. It has to get permission from the Supreme Court to allow it to appeal the decision first - that step could take months. And if it wants to sell its shareholding in Aer Lingus, it has to get written permission from the UK Competition and Markets Authority.

*** Air France is to meet unions today to discuss cost reduction measures at the airline as it struggles to bring expenses into line with its peers. Job losses are expected at the airline. Air France is due to report quarterly earnings next week. Passenger traffic and average fares both fell in January amid softer demand on routes to emerging markets.

*** The German economy expanded by 0.7% in the fourth quarter of 2014.  The result lifted the growth rate for the full year to a robust 1.6% - better than a previous official estimate of 1.5%.