BOE Inflation Report:
* CPI Seen Around 1.6% In 2 Years; 1.8% In 3 Yrs
* BOE Inflation Forecast Implies Scope For Further QE
* Sees Rates At 0.6% In Q2 2013; 1.0% By Start 2015
* Growth Seen Subdued In Near Term, Then Gradual Recovery
* But Eurozone Seen A ‘Significant Threat’ To Rceovery Scenario
The BOE Inflation Report shows inflation well below its 2% target in 2 years time despite its decision to leave the stock of official asset purchases (QE) unchanged at its May MPC meeting. Inflation is put around 3% in 3 years while underlying growth remains subdued through the near term, with the euro zone, fiscal consolidation and tight credit constraining expansion. A gradual recovery stays the mainline scenario, but the euro zone crisis remains a ‘significant threat’ to that. The committee says that the risks of inflation being above or below 2% by the end of the forecast period are broadly balanced.
EasyForexNews Research Team