Wednesday, Feb 11, 2009
..And food inflation will be...?
Reuters: Bank sees inflation at 0.5 percent in 2 years
Inflation will hit just 0.5 percent in two years as the economy shrinks rapidly over 2009, new Bank of England forecasts showed on Wednesday, opening the way for further interest rate cuts ahead. In its quarterly Inflation Report, the central bank predicted inflation well below the 2 percent target for the next 3 years if rates were to follow the path set by the market yield curve.
Posted by alan @ 11:08 AM (987 views) Add Comment
11 Comments
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1. wdbeast said...
And the last time a 2 year B of E forecast was anywhere near accurate was?
2. mountain goat said...
"Bank sees inflation at 0.5 percent in 2 years so its ok to let GDP sink" Bank's King says further easing could include buying gilts. Better make sure we can grow our own food, I don't believe this 0.5% inflation prediction.
3. debtfree said...
Maybe they know something we don't..... like adding house prices to the inflation basket.
4. paul said...
Actually, inflation is heading sharply southwards. I think Swervin Mervyn knows the game is up.
5. renting2 said...
Suspect they know that the quantative easing money is not going to find its way into the pockets of the consumers. No money to spend, prices drop.
6. paul said...
CROSBY'S RESIGNED!
7. mark wadsworth said...
Hurray for deflation! Food is less than a tenth of our budget, if it goes up in price by ten per cent then we can either buy and use a bit more carefully or take that extra few hundred quid on the chin.
And I'm happy to lose a few hundred quid a year in exchange for house prices tumbling by tens of thousands of pounds a year (or by a hundred thousands pounds a year round where I live)
8. 51ck-6-51x said...
They are not going to be right because it's too hard!
The BoE report is here
As a precursor they must construct a yield curve from market data across multiple instruments, but they must both adjust the data to reflect such things as liquidity, credit risk and optionality as well as infer the forward rates from these overlaying data. Anyone interested in their methodology can read about it here.
9. 51ck-6-51x said...
mark wadsworth - whereabouts do you reside?
10. 51ck-6-51x said...
From the BoE report:
"""
The UK economy is undergoing a significant and sustained adjustment, as banks restructure their balance sheets, and the private sector cuts back on spending and increases saving. Monetary policy cannot — and should not — prevent necessary long-term adjustment: the challenge is to avoid excessive short-term movements in output and employment, while returning inflation to the 2% target.
"""
Well there you have it people! They are acting in our interests, they only plan to decrease momentum - right?!
11. Hoddoi said...
Not in food it ain't.