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-NIESR Raises 2018, 2019 GDP Forecasts To 1.9%; Back At 1.6% 2021
By David Robinson
LONDON (MNI) - The National Institute of Economic and Social Research has
nudged up its growth forecasts for this year and next but predicted it would
then slow again.
In a release Wednesday, NIESR say they estimate that UK growth would be
1.9% in 2018 and 2019 before easing to 1.7% in 2020 and 1.6% in 2021 and 2022.
The Bank of England is also expected to nudge up its near-term growth forecasts
when it unveils its quarterly Inflation Report (IR) on Thursday.
The BOE in the November IR put growth at 1.7% for 2018 and 2019 while the
International Monetary Fund estimated UK growth at 1.8% this year and 1.5% next
BOE Governor Mark Carney said in evidence to the Lords Economic Affairs
Committee last week that the Bank believed that the IMF forecast "is a little
light for the UK economy for 2018" and it would be no great surprise if the Bank
near-term forecasts were very similar to NIESR's.
NIESR expects that the BOE Monetary Policy Committee will hike Bank Rate by
another 25 basis points in May and will continue to raise it in six monthly
instalments until it reached 2.0%. That 2.0% level is the level around which
current MPC guidance states that it would start to unwind quantitative easing.
Money markets had been placing around a 60% chance on a May hike, although
stock market turbulence distorted rate expectations Tuesday.
NIESR forecast that headline UK CPI inflation would fall from 2.7% in 2018
to 2.1% in 2019 before dropping back to hit the 2.0% target in 2021.
--MNI London Bureau; tel: +44 203-586-2223; email: email@example.com