The Office for National Statistics is expected to say on Tuesday the annual rate of inflation fell to 3.6pc in January, from 4.2pc in December, providing some relief for consumers.
The January 2011 VAT rise will have fallen out of the annual comparisons for the first time, and favourable utility price comparisons are also expected to lower the Consumer Prices Index. (AtW's comment: this means 3.6% inflation in current month without effect of 2.5% VAT is MORE than one would expect FFS!)
Despite the fall, the Bank’s Governor, Sir Mervyn King, will be required to write his thirteenth letter to the Chancellor, to explain why inflation is more than one percentage point away from the 2pc target. (AtW's question: how many more letters would it take to get him FIRED?)
“However, on our forecasts showing a continued decline in inflation over the next few months, he may at last be able to put his pen away soon,” said Philip Shaw, economist at Investec.
The Bank is expected to say that with monetary policy as it currently is, inflation is likely to be below target on a two-year to three-year horizon, when it publishes its latest forecasts in the quarterly Inflation Report on Wednesday.
That would pave the way for more quantitative easing (QE) in the coming months, after the Bank’s Monetary Policy Committee voted for £50bn more of asset purchases at its monthly policy meeting last week, taking the total QE spend to £325bn.
The Bank justified its decision against the backdrop of a weak economy, and said that without more stimulus, inflation was more likely than not to undershoot the 2pc target over the medium term.
“We continue to expect a series of further instalments of QE, paced alongside evidence of lower inflation, with the total ultimately reaching about £600bn, perhaps around the end of this year or in 2013,” said Michael Saunders, economist at Citigroup.
Source: Inflation Report set to show sharp fall in inflation - Telegraph
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Oh FFS, how can they write with straight face that "without more stimulus, inflation was more likely than not to undershoot the 2pc target over the medium term."
The January 2011 VAT rise will have fallen out of the annual comparisons for the first time, and favourable utility price comparisons are also expected to lower the Consumer Prices Index. (AtW's comment: this means 3.6% inflation in current month without effect of 2.5% VAT is MORE than one would expect FFS!)
Despite the fall, the Bank’s Governor, Sir Mervyn King, will be required to write his thirteenth letter to the Chancellor, to explain why inflation is more than one percentage point away from the 2pc target. (AtW's question: how many more letters would it take to get him FIRED?)
“However, on our forecasts showing a continued decline in inflation over the next few months, he may at last be able to put his pen away soon,” said Philip Shaw, economist at Investec.
The Bank is expected to say that with monetary policy as it currently is, inflation is likely to be below target on a two-year to three-year horizon, when it publishes its latest forecasts in the quarterly Inflation Report on Wednesday.
That would pave the way for more quantitative easing (QE) in the coming months, after the Bank’s Monetary Policy Committee voted for £50bn more of asset purchases at its monthly policy meeting last week, taking the total QE spend to £325bn.
The Bank justified its decision against the backdrop of a weak economy, and said that without more stimulus, inflation was more likely than not to undershoot the 2pc target over the medium term.
“We continue to expect a series of further instalments of QE, paced alongside evidence of lower inflation, with the total ultimately reaching about £600bn, perhaps around the end of this year or in 2013,” said Michael Saunders, economist at Citigroup.
Source: Inflation Report set to show sharp fall in inflation - Telegraph
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Oh FFS, how can they write with straight face that "without more stimulus, inflation was more likely than not to undershoot the 2pc target over the medium term."
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