The Bank of England will probably keep rates unchanged until the mid 2011-th, says NIESR

The British National Institute of Economic and Social Research published in Wednesday night its estimate of GDP for the three months ending in August. According to these estimates Britain's economy added 0.7% over this period. This increase is almost twice lower than that observed even a month earlier. During May-July, growth was 1,3%. That is an exception to the series in May drastically lowers the assessment of the dynamics of growth. And, as noted in the report, in the future growth rate will continue to decline. Overlooking the Bank of England before the meeting, this report often gives a very correct forecasts of monetary policy. The Institute continued to imply that economic conditions will not allow going to tighten monetary policy until the middle of next year.In part, this is confirmed by a recent study of inflationary expectations. It is very interesting because of persistent inflation above the target level of 3.0% over the past eight months, and also promised to increase taxes in the new year, which is also boosting the prices to rise. In all of this the British expected inflation in the coming year and two slightly above 2 percent. Same point of view, it seems, share and debt markets, buying British 10-year gilts with a return of 2.99%. Also interesting picture of the current recession compared with the previous depth and duration. The same sharp and deep as the Great Depression, the current recession is increasingly begins to resemble a 79-83 situation, and thus to restore GDP to the peak pre-crisis levels will take another year and a half.

Translate this page