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

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza