Commenting on the minutes of the Bank of England’s Monetary Policy Committee’s August meeting released today, KPMG Chief Economist, Andrew Smith, said:
“Following sharp downward revisions to forecasts for growth and inflation in last week’s Inflation Report, it was unlikely that the minutes of August’s MPC meeting would contain any more surprises. In the event all nine committee members plumped to sit on their hands, opting to wait and see how the latest round of Quantitative Easing launched in July feeds through.
“However, the Committee is unlikely to remain inactive for long. Last month’s uptick in inflation is unwelcome, but should not unduly concern policy makers as the underlying trend is firmly down and headline inflation remains on track to return to target around the turn of the year. As long as the economy remains moribund and the output gap remains large, further stimulus is on the cards. So, expect another tranche of Quantitative Easing when the current one is completed in November - and more extreme policy measures cannot be ruled out.”
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Notes to editors.
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.