Details from the NIESR’s latest UK forecasts
- 2018 GDP 1.9% vs 1.7% prior
- 2019 GDP 1.9% vs 1.7% prior
- 2018 CPI 2.4% vs 2.2% prior
- 2019 CPI 2.0% unch
- GDP is forecast to grow by nearly 2 per cent this year and in 2019. Our forecasts have been revised higher since November.
- Annual consumer price inflation peaked at 3 per cent in the final quarter of 2017 and is forecast to ease back to the target rate of 2 per cent over the next eight quarters.
- We expect the Bank of England to continue normalisation by raising Bank Rate in May by 25 basis point steps and every six months after that until the policy rate reaches 2 per cent
The upward revision to our growth forecast primarily reflects a more positive outlook for global growth and to a lesser degree is also a response to the progress in Brexit negotiations. The agreement in December has helped lift some of the uncertainty that has weighed down on business investment in our view. All in all, net trade will continue to make a sizeable contribution to economic growth, helping the economy rebalance away from domestic demand over the next two years.
Upbeat comments from the NIESR and it looks to be supporting the pound. GBPUSD bounces to 1.3909 from 1.3875.
Update 11.51: This was actually out around midnight last night but it’s just been tweeted around by NIESR and other sources.
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