Commenting on today’s Bank of England (BoE) inflation report, Yael Selfin, KPMG Chief Economist said:
"The Bank of England made more than a cosmetic uplift to its forecasts for the UK economy today, pointing to a strong overall outlook for the year. The MPC’s projection of consumer spending this year was revised upwards, as expectations for unemployment have become even more upbeat, with consumer spending now expected to slow more gradually this year as inflation begins to bite.
“Less pressure on the pound, as the focus of markets’ attention turns elsewhere, is providing a backstop for any further deterioration in the inflation outlook. Given the volatility expected in the first half of 2019, as the UK exits the EU, we could see rates beginning to rise later than markets are currently indicating. The MPC may decide to start its tightening cycle only after the UK is safely out of the EU, despite a short to medium term peak in inflation above the MPC target of 2%.”
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