Latest Bank of England inflation report now out 12 May 2016
- inflation in 2 years time f/cast at 2.07% vs +2.05% prev.
- inflation in 3 years time f/cast+2.23% vs +2.25% prev
Says the BOE:
"CPI inflation has risen a little further, to 0.5%, but remains well below the 2% target. That shortfall primarily reflects a continuing, albeit temporary, effect from past falls in energy prices, along with a drag from the prices of food and other imported goods and services; domestic cost pressures also remain subdued.
Four-quarter GDP growth has slowed from above-average rates in 2014, and is likely to have fallen back further in 2016 Q2 as uncertainty around the forthcoming referendum on UK membership of the European Union weighs on companies' and households' spending.
Consistent with the MPC's usual convention that government policy is followed, the projections in this Report are conditioned on an assumed continuation of EU membership, so that weakness in activity starts to unwind in the second half of the year.
The MPC's best collective judgement, conditioned on the path for Bank Rate currently implied by market interest rates, is that growth is likely to recover next year, such that spare capacity is eroded and, as the drag from external factors fades, rising domestic cost growth returns inflation to the 2% target by the middle of 2018"
Full report here
Lower immediate growth to be followed by a stronger trend but all subject to Brexit still.
GBP on the rise in the aftermath .GBPUSD testing 1.4500 EURGBP 0.7867
Watch Carney's presser from 11.30 GMT here.
