First Inflation Report of Governor of Bank of England
First Inflation Report of Governor of Bank of England
Summary of Bank of England's Inflation Report
Bank of England's Inflation Report makes it apparent that a recovery from financial crisis in the United Kingdom is taking hold. However, the legacy of adjustment and fixing left by the economic downturn indicates that the recovery is most probably remaining weak by historical standards. Consumer Price Index inflation rose to 2.9% in June and appears to remain somewhat same in the near term. Thus, Inflation is above target, and likely to remain so. On the other hand, output is below the level it was 5 years ago and unemployment is elevated. Against these depriving conditions, the committee has offered certain explicit guidance about the potential conduct of monetary policy (Inflation Report, 2013, p.1-4).
The Monetary Policy Committee intends at a minimum to maintain the existing highly inspiring position of monetary policy until financial downturn has been considerably declined, provided this does not involve material risks to financial or price stability. In addition, the Bank has now intends to keep this rate at its current historically low 0.5% at least until the unemployment rate falls to 7% or below. According to the Committee, a sustained recovery in both supply and demand seems likely. The growth outlook is stronger than May, particularly revealing a marked enhancement in consumer sentiments and business environment. This higher demand is likely to be matched by stronger increase in efficient supply capacity, while the inflation is estimated to decline around the 2% target over the forecasted period (Bank of England, 2013, n.d; Inflation Report, 2013, p.1-4).
Main Implications of the Governor's Report for Various Stakeholders
Twenty years following the publication of first Inflation report, the latest issuance of report evidences complex economic conditions in the United Kingdom. The report implies a road to recovery, on which will see inflation reduced to the target and output increase beyond the existing very low growth rates. However, stakeholders may review it as a great deal of uncertainty about the inflation outlook in near term. The inflation report of bank implies for various stakeholders that gas prices may increase by 15% as well as electricity prices by 10% in near future. In addition, the domestic fuel prices are also expected to rise in near term (Sky News, 2013, n.d).
According to the Governor's Report, there were other factors impacting ...