Tuesday, October 19, 2010
Latest Ernst & Young ITEM club quarterly forecast
The Bank of England base rate is set to stay at 0.5% until 2014, according to the latest Ernst & Young ITEM club quarterly forecast. The report says the risks of overheating and deflation in the British economy have both been exaggerated. As a result, while increases in commodity prices and value added tax (VAT) will keep CPI inflation above its target over the next year, the ITEM club forecasts CPI to move below the 2% target from January 2012 when the next VAT increase drops out of the calculation. â€œDespite the mounting tensions within the MPC, this prospect is likely to keep Bank base rate on hold next year and the forecast does not see it increasing until 2014,â€ says the report.