"The MPC delivers a sombre assessment of the short-term outlook for the UK economy” says Yael Selfin, Chief Economist at KPMG UK
“The Bank of England is now expecting uncertainty to have a more prolonged negative impact on business investment, causing a downgrade to its latest projections and signalling the challenges facing businesses over the short-term.
”The Bank of England took a positive step in demystifying its forecasts by providing an indication of how they will fare under a more accurate reflection of future monetary policy and asset prices. These scenarios suggest that the stronger pound and higher cost of credit in the short-term than what markets currently anticipate, would see year-on-year growth fall to 0.9-1.1% by 2020 Q3. They also suggest that inflation will remain below 2% target until at least 2022 Q3 without the need to raise interest rates from their current level.
“Current MPC projections are based on relatively positive assumptions for the global outlook but if recent trends of a more subdued growth in Europe materialise, we could also see weaker UK growth.”