The Bank of England sees GDP troughing with an annual fall of around 4.5% at the start of Q-2, which is worse than government and general forecasts. Cable has taken it on the chin, slumping to 1.5260 at writing.
The bank sees growth resuming in Q-1 2010 before hitting a growth rate of around 2.5% in 2 years time.
Despite the forecasts, the bank feels the timing and strength of any recovery remains highly uncertain, but MPC expects it to be relatively slow.
Bank sees inflation troughing at around 0.5% at the start of Q-4 2009 before picking up to around 1.2% in 2 years time.
Bank says it will take time for effects of QE to become visible in data, difficult to isolate it’s impact. King thinks it will take 6-9 months before we see more evidence on impact of QE.
Mervyn King feels even if there is recovery in next 6-9 months doesn’t know how sustainable it will be.