LONDON (MNI) – Inflation is set to fall to a sliver above 1.2%
during 2013 and growth to around a mere 1% next year, the numerical
forecasts underpinning the Bank of England’s November Inflation Report
show.
The forecasts, released Wednesday, show CPI falling from an average
4.71% in the fourth quarter of this year to a low of 1.21% in the second
quarter of 2013 and just 1.27% by the fourth quarter of 2013. The
minutes of the Bank of England Monetary Policy Committee’s November
meeting showed members divided over whether the forecasts supported the
case for further stimulus in the future.
The forecasts do show inflation rising towards the end of the three
year forecast horizon. On the modal, market rate projection CPI edges
back up to 1.5% by the fourth quarter of 2014.
“Some members noted that the balance of risks to inflation in the
November Inflation Report projections meant that a further expansion of
the asset purchase programme might well become warranted in due course;
anticipation of that might itself have an effect on asset prices and
demand. Some other members judged that the risks to inflation around the
target were more balanced,” the minutes said.
The forecasts show the upside skew evident in earlier inflation
reports has disappeared. The mean and median forecasts are
indistinguishable from the modal projection. The probability of
inflation falling below 1% by Q4 2013 is put at over 40%.
It is tricky to strip out the BOE’s calendar year growth forecasts,
due to its use of a growth “backcast”, but the implied 2011 forecast is
estimated around 1%.
–London newsroom: 44 20 7862 7491; email: drobinson@marketnews.com
[TOPICS: MABDS$,M$B$$$,M$$BE$]
