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Quarterly Inflation Report: Inflation and growth rate projections down

FXStreet (London) - "The expansion in UK domestic demand has continued. But the outlook for global growth has weakened. Some asset and commodity prices have fallen, as have market interest rate expectations. Growth is projected to be a little weaker than in August. It slows slightly in the near term, settling back to around historical average rates, underpinned by a gradual pickup in demand abroad and a revival in productivity and real household income growth at home.

Inflation has fallen further below the MPC’s 2 Percent target, reflecting the impact of lower food, energy and import prices and some continued drag from domestic slack. Inflation is expected to remain below the target in the near term, and is more likely than not to fall temporarily below 1% at some point over the next six months. It then rises gradually back to the target as external pressures fade and unit labour cost growth picks up.

The MPC’s guidance on the expected path for Bank Rate continues to apply. When Bank Rate does begin to rise, the pace of rate increases is expected to be gradual, with rates probably remaining below average historical levels for some time."

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