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Inflation to stay above 2% until end of 2011
Business Digest: Bank of England also cuts growth forecast in its quarterly report while King predicts ‘choppy recovery’
The Bank of England (BoE) expects inflation to remain above its two per cent target until the end of 2011, it has announced in its quarterly inflation report. This is significantly longer than projected in May thanks to the planned VAT rise in January.
The Bank has also downgraded its forecast for GDP growth. The Bank now expects the economy to grow by about 2.5 per cent in 2011, down from its previous forecast of around 3.4 per cent.
Speaking at a press conference this morning the Governor of the Bank of England Mervyn King warned that the UK economy faces a "choppy recovery".
"It will take many years before bank balance sheets and fiscal positions return to anything like normal," said King. "In the meantime they will act as headwinds to the recovery."
Meanwhile King denied that banks are being "bloody minded" in the way that they lend their cash. The cost of bank lending is so high, he said, because banks "are facing higher costs of obtaining funding [themselves]".
Read a full report on the Guardian. ·
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Of course inflation is too high, any inflation is too high, it means rising prices and lowering of the value of the pound or euro or dollar in your pocket. But let us note that the Bank of England, under instruction by the government, have been at it for as long as we can remember. Inflation is CAUSED by "quantitative easing" (QE). Responsible economists call it "printing money and stoking inflation". Of course it is nearly all done electronically now, they just add nine noughts to an account and create a billion in a flash. And then the government get a "free lunch" to buy what they like...and the public get rising prices a year later as the money trickles down into the private sphere. The process is all but invisible, but not all but criminal - it is entirely criminal. If anyone else did it, they would do hard time for robbing the government!