MNI BRIEF: First BOE Cut In May, Inflation Sub 2% Q2 - NIESR

The Bank of England, faced with volatile inflation, is likely to take a cautious approach to policy easing with the first cut coming in May and the policy rate falling from its current 5.25% to settle around 3.25% in the medium term, the National Institute of Economic and Social Research assumed in its new quarterly forecast.

NIESR forecast that inflation would drop below the 2% target as early as early as the second quarter before rising back above it by year end, while growth would pick up to 0.9% in 2024, in touching distance of he new, low-trend level of just 1.0%. The institute called for greater clarity from the Bank over its likely easing path and for it to provide alternative scenarios.

Former US Federal Reserve head Ben Bernanke is currently reviewing the uses of, and communication surrounding, the BOE's forecasts. (see MNI POLICY: Bernanke Review Looks At BOE Rate Path, Scenarios)