• Broadly equal chance of CPI being either above or below target 2% in 2 years, if rates follow market path
  • Still a wider than usual range of views on MPC over outlook for inflation and growth, prospects highly uncertain
  • CPI will most likely fall a little below target in medium-term, but risks skewed to upside
  • Near-term CPI forecast markedly higher than in November, seen hitting 4-5% mid 2011 before falling back
  • 2011 GDP growth seen weaker than November, seen rising to around 3% at 2 year horizon, but downside risks
  • Forecasts based on market rates at 0.8% in Q3 2011, 1.0% Q4 , rising to 2.1% Q4 2012
  • After near-term weakness, GDP growth as likely to be above as below historical average, spare capacity likely to persist
  • Growth likely to resume after snow-impacted Q4, helped by expansionary policy, global demand, past fall in sterling
  • Fiscal tightening, squeeze on households from commodity prices, muted wage growth likely to act as brake to growth