Bank of England Inflation Report

“The most interesting part of Thursday’s events will be Mark Carney’s press conference. The Bank will probably revise up their forecasts for inflation and growth in the short term. So Mr Carney is bound to be asked why he’s not planning on raising interest rates in response. The answer will be that the central bank looks beyond this kind of inflation because it thinks it won’t last.

“The bigger challenge is going to be the inevitable questions about Brexit. Carney will be expected to account for the fact that we know more about Brexit now than we did previously. But there are still really important questions that Theresa May’s speech two weeks ago left open, so accounting for Brexit in the forecasts will be extremely tricky. Mr Carney has already been accused of being partisan on the issue, so he’s going to have to say something without saying much at all.”

Lucy O’Carroll 

Aberdeen Asset Management Chief Economist