— Adds Detail To Version Transmitted At 1012 GMT
LONDON (MNI) – The Bank of England’s detailed numerical forecasts
show that while on the modal, or most likely path, inflation will fall
back below target, on the mean projection it will hold above it
throughout the entire three-year forecast period.
These projections, which are central to the February Inflation
Report, underpin the BOE Monetary Policy Committee’s belief that the
inflation risks are skewed to the upside.
Based on market interest rate expectations the Bank of England
expects inflation to fall from a peak of 4.45% in the third quarter of
2011 to just 1.62% by the first quarter of 2013.
The figures released Wednesday reveal that on modal market rates
CPI is expected to first fall below the 2% target in the third quarter
of 2012 and to stay below target all the way through to the first
quarter of 2014 – the end of the forecast period.
The detailed figures show a substantial upside skew with the median
and mean projections markedly above the mode.
The mean projections show CPI two years ahead just above target at
2.02% and holding above target through the third year.
On the mean forecast CPI is always above the 2% target throughout
the entire forecast period.
The modal growth forecasts show growth decelerating from a yearly
2.36% in the first quarter of this year to a low of 1.74% in the third
quarter, before rising to reach 3.01% in Q2 2012.
Growth is then projected to stay at a little above 3.0% through to
the end of the forecast period in Q1 2014.
Growth risks are skewed to the downside with the mean forecast
showing growth at just 1.55% in Q3 2011 and never rising above 2.7% for
the remainder of the forecast period.
–London newsroom: 4420 7862 7491 e-mail: drobinson@marketnews.com
[TOPICS: M$B$$$,M$$BE$,MABPR$,MT$$$$]
