BoE Mervyn King Cuts UK Growth Forecast

In its quarterly Inflation Report, the Bank indicated that growth in two years time was likely to be around 2% a year, down from around 2.7% forecast from three months ago.

The governor added: “Unlike the Olympians who have thrilled us over the past fortnight, our economy has not yet reached full fitness. But it is slowly healing. Many of the conditions necessary for a recovery are in place, and the MPC will continue to do all it can to bring about that recovery. As I have said many times, the recovery and rebalancing of our economy will be a long, slow process. It is to our Olympic team that we should look for inspiration. They have shown us the importance of total commitment when trying to achieve a goal that may lie some years ahead”.

On inflation, King added: “CPI inflation has continued to fall from its high of 5.2% last September, reaching 2.4% in June, and is expected to fall further this year. Twice in the past four years inflation has risen above 5% as a result of external price pressures. On both occasions the Committee said that inflation would fall back, and on both occasions it has … Inflation is likely to fall further from its current level to be around or a little below target for much of the forecast period, as the impact of external price pressures eases, and domestic cost pressures remain subdued. At the forecast horizon, the risks to inflation around the 2% target are broadly balanced”.

via The Guardian

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.