BoE says inflation to reach 5% in 2011, however, ease through 2012 and 2013

By @ibtimes on

The Bank of England released the August Inflation Report which contained the Bank's expectations for the fourth quarter of 2011 regarding the outlook for GDP growth and inflation.

In regards to the outlook forgrowth, the bank expects the GDP growth in the United Kingdom to remain sluggish in the near term, reflecting the continuing pressures on individuals' income, but then growth will pick up gradually, however, the outlook for growth remains highly uncertain.

The bank revised lower their growth expectations according to the fanned charts projections and the exact expectations will follow a week from today.

Moreover, the outlook for inflation is expected higher still over the coming period and could reach 5%, boosted by higher utility prices, but consumer price index is likely to fall back over medium term as impact of factors raising inflation diminish with possibility to undershoot 2.0% target.

For the policy decision, the Monetary Policy Committee saw it was appropriate to maintain Key Rates at 0.5% and the stock of asset purchases at £200 billion in August, in order to meet the 2% CPI inflation target over the medium term.

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