LONDON (MNI) – Inflation will come in well below its 2% target
level in two years time based on market rate assumptions and maintained
stg200 billion of asset purchases, the numerical projections
underpinning the Bank of England’s August Inflation Report show.
The parameters show inflation on market interest rates at a modal
1.32% in Q3 2012.
The BOE’s “numerical parameters”, published Wednesday, show the
mean forecast for inflation significantly above the modal one,
highlighting the upside risks to inflation, with the mean at 1.72% in
Q3 2012, an upside skew of 0.4 percentage points.
That skew continues to highlight the substantial upside risks to
the BOE’s CPI forecast, something which the Monetary Policy Committee
cited again today in the release of its minutes for its Aug 4-5 meeting.
On unchanged rates and stg200 billion of QE, the modal forecast is
for CPI inflation at 1.56% in 2 years time and 1.96% on a mean basis.
The August growth projections show the modal forecast for GDP to
be around 2.45% y/y in Q3 2010, accelerating to 2.79% in 2011 Q1 and to
2.98% by the end of next year. Growth then picks up further steam going
into 2012, reaching 3.28% in Q1 2012 then peaking at 3.32% in 2012 Q2
before edging slightly lower but maintaining a level just over 3%
until the end of the forecast period.
The near-term growth forecast is roughly similar, although with
growth reaching a higher medium-term peak at 3.57% in Q2 2012.
–London newsroom 0044 20 7634 1655; email: ukeditorial@marketnews.com
[TOPICS: M$B$$$,M$$BE$]
