Topic: Loans With Quick Sign - BoE gives gloomy outlook,little scope for rate cuts - guardian.co.uk
LONDON, May 14 (Reuters) - The British economy could shrink for a quarter or two and inflation may near 4 percent this year, the Bank of England said on Wednesday in its bleakest forecasts since the Labour government took power in 1997. Economists said the expected spike in inflation even further above the central bank’s 2 percent target meant that interest rates won’t come down quickly, even with news on the housing market downturn getting nastier by the day. He is banking on a quick recovery to win back support for his Labour Party after it was pushed into a humiliating third place in local elections this month by voters worried about the rising cost of living and falling house prices. Another Reuters poll on Wednesday showed analysts expect a 5 percent house price fall this year and another 5 percent in 2009, but many commentators are even more pessimistic. The government has been lobbying mortgage lenders to pass on the BoE’s three official rate cuts to their customers in an attempt to revive the market. King said he expected to have to write to the government several times on how he plans to bring prices back under control — as required by the central bank’s remit if inflation deviates from target by more than a percentage point. Learn more
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