13 May 2015
BOE Quarterly Inflation Report: Cuts 2015 GDP forecast
FXStreet (Mumbai) - The Bank of England (BOE), in its quarterly inflation report (QIR), released on Wednesday revised its growth forecasts lower, while stating that the inflation is likely to fall below zero in coming months.
On Growth
The BOE revised 2015 GDP forecast lower to 2.5% from 2.9%, 2016 GDP forecast to 2.65 from 2.9%, and 2017 GDP forecast to 2.4% from 2.7%. The bank expects the Q1 growth to be revised higher to 0.5% from the previous estimate of 0.3%.
On inflation
The BOE raised its 2015 forecast to 0.6% from 0.5% and cut the 2016 forecast to 1.6% from 1.8%. The CPI is expected to return to its 2 percent target within two years.
Though the inflation rate may dip below zero in the coming months, there will be a pickup at the end of the year, and the Monetary Policy Committee “judges it more likely than not that the bank rate will increase from its current level over the forecast period.”
On interest rates
The BOE reiterated its message that the next move is more likely to be an interest rate hike. The forecasts are based on the first rate hike happening in Q2 2016 Vs. Q3 2016 in Feb.
However, the bank said there is “little sign” of the U.K. slipping into deflation, though it is ready to cut the benchmark rate or restart asset purchases if needed.
On Growth
The BOE revised 2015 GDP forecast lower to 2.5% from 2.9%, 2016 GDP forecast to 2.65 from 2.9%, and 2017 GDP forecast to 2.4% from 2.7%. The bank expects the Q1 growth to be revised higher to 0.5% from the previous estimate of 0.3%.
On inflation
The BOE raised its 2015 forecast to 0.6% from 0.5% and cut the 2016 forecast to 1.6% from 1.8%. The CPI is expected to return to its 2 percent target within two years.
Though the inflation rate may dip below zero in the coming months, there will be a pickup at the end of the year, and the Monetary Policy Committee “judges it more likely than not that the bank rate will increase from its current level over the forecast period.”
On interest rates
The BOE reiterated its message that the next move is more likely to be an interest rate hike. The forecasts are based on the first rate hike happening in Q2 2016 Vs. Q3 2016 in Feb.
However, the bank said there is “little sign” of the U.K. slipping into deflation, though it is ready to cut the benchmark rate or restart asset purchases if needed.