A marked shift in commentary occurred overnight following the Bank of England's Monetary Policy Commi...
The Times says the first rate hikes could be seen within a month, something that UK industry is desperate to avoid.
Industry would be unlikely to win the argument of the day, the paper says.
"City economists argued that burgeoning consumer demand meant that borrowing costs would have to rise," it adds.
The Times says the pound gained half a cent against the US dollar as the interest rate market moved the long-term rate up to 5.5% by the end of this year.
Share prices dropped, although they were up again this morning.
There is continued danger in the mixed signals; The Times reports that house prices rose by nearly 20% in East Anglia last year, for example, but new national statistics show that company earnings and profitability are at their lowest for more than two years.
The Telegraph calls the situation a "dilemma" for the men and women who must decide rates.
"Although the minutes of this week's meeting and the voting pattern will not be published for a fortnight, Bank of England Governor Sir Edward George is known to be concerned about the likely risks of stoking consumer spending further," the paper says.
It adds that economists are also divided about future rate changes.
"Many believe the UK has now reached the trough in the interest rate cycle, while others suggest that with inflation still apparently well under control, the MPC has room for a further cut before a tightening trend begins later in the year."
And despite the sales boom on the high street, the British Retail Consortium claims that this has not generated the sorts of inflationary pressures that the MPC is worried about, noting that prices increased just 0.11% during the Christmas sales season.
"This confirms that the high sales growth of 2001 has not generated inflationary pressure. Shoppers are spending, but not recklessly. These figures give no reason for the Bank of England to tighten interest rates," the consortium says.
Other news of note is the setting of a new record for sex discrimination cases in the financial services industry.
Julie Bower was a drinks analyst with Schroders Securities before being driven out by what an employment tribunal called "laddish and sexist" culture.
The tribunal awarded Bower about £1.5m in compensation for the loss of earnings and damage to her career, as well as the bonuses she should have been awarded in line with what her male colleagues received.
Shroders is appealing the case, but the company has already been criticised in the tribunal for subjecting Bower to "bad mouthing and false criticism even in this tribunal".
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