Inflation Report set to reaffirm low rate outlook

This week’s Inflation Report should confirm that the majority view on the Monetary Policy Committee remains that the economy is still some months away from justifying higher interest rates. Indeed, the Committee’s forecasts for both GDP growth and inflation look set to be lowered.

Meanwhile, last week’s fall in the CIPS/Markit composite PMI to a 16-month low prompted fears in some quarters that the UK’s recovery could be slowing sharply. But there are number of reasons not to be too concerned at this stage by the weaker tone of the PMIs.