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Bank of England: Inflation by 2013 could be 4%… or minus 0.5% – take your pick

The bank of England have released their Quarterly Inflation Report. Why the MSM give so much attention to an organisation like the BoE who have such a poor track record at ‘guessing’ the CPI rate is beyond us – but we digress.

The report is full of the usual ‘fan-charts’ which seem to be all the rage at the BoE – the charts aren’t particularly helpful in estimating the CPI rate in the future, but they are great at highlighting the bank’s schizophrenic mind when it comes to forecasting.

You can read the full report here. But the only two charts that matter are the CPI and GDP charts. First up the GDP chart and a comparison with the chart from the same report back in November 2011.

November 2011 GDP predictions:

February 2012 GDP predictions:

We can see that back in the November report the BoE thought GDP could get as low as minus 2% in 2012. It would appear that now the BoE is more bullish on the UK economy and the lowest possible rate that GDP might dip to is now minus 1.5%.

It would also appear that the ‘recovery’ (used in the loses possible way) in the second half 2012 (just how many ‘second half’ recoveries have been predicted since 2008?) will be much sharper than they previously thought.

November 2011 CPI predictions:

February 2012 CPI predictions:

Back in February the BoE saw a risk that the CPI would get below minus 1% by 2013. Now this figure is minus 0.5% – so clearly the BoE is expecting more inflation this year than they did 3 months ago.

Other than that the CPI expectations are broadly similar to that of the November report. Both reports have CPI inflation reaching their 2% government mandated target by 2013.

We’re going to make a bold prediction that you can come back and check in 9 months time. CPI inflation will be running much higher than 2% by then – how can we be so sure? Because there is no 2% target – its a myth. The BoE and the UK government positively want higher than 2% inflation – that’s what money printing (QE) is all about. Nice of them to let you know about such a dramatic policy shift wasn’t it?

Also as a quick aside there is an interesting note on house prices for the past two years. It’s interesting because there seems to still be some confusion about whether house prices have gone up (as the MSM would have you believe) or whether house prices have fallen (as we’ve reported on over the past couple of years). Well wonder no more – this from the horses mouth as it were:

House prices (Table 1.B) have been broadly unchanged over the past two years, having fallen during the recession. But rising consumer prices and average earnings imply that real house prices have continued to decline.

[emphasis ours]

Link to this article: : http://www.goldmadesimplenews.com/gold/bank-of-england-inflation-by-2013-could-be-4-or-minus-0-5-take-your-pick-6169/

Posted by on Feb 16 2012. Filed under Gold and Silver Media, Gold News, Markets. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

1 Comment for “Bank of England: Inflation by 2013 could be 4%… or minus 0.5% – take your pick”

  1. If QE slows down ( or halts ) before a strong and obvious recovery, we should expect deflation.

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