Inflation Fears Dampen Stimulus Prospects

Higher expectations for inflation make it less likely quantitative easing will be resumed, according to the chief economist of the British Chambers of Commerce (BCC).

Says David Kern, ‘The new inflation report [from the Bank of England] suggests that the Monetary Policy Committee is expecting inflation over the next two years to be higher than they predicted in August, and growth to be slightly higher than the historical average.

‘On the basis of this assessment, the prospect of an early increase in quantitative easing has diminished.’

Bank of England governor Mervyn King said yesterday that changes to VAT, ‘sharp gyrations in global commodity prices’ and a lower value for sterling against other major currencies are all factors that have contributed to higher inflation.

Read full article: http://www.growthbusiness.co.uk/news/business-news/1297968/inflation-fears-reduce-stimulus-prospects.thtml

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