Sarah Breeden, the incoming Deputy Governor for BoE, shared her economic forecast during a parliamentary Treasury Committee approval hearing today. She is slated to replace Jon Cunliffe as come November.
Breeden conveyed her anticipation for the inflation rate to be near the 2% target within a span of two years, an outlook that is based on the premises outlined in BoE’s August forecast.
Despite the somewhat optimistic perspective on inflation, Breeden aired her expectation of “relatively flat GDP in the UK over the next couple of year”.
The expectation for a subdued GDP is rooted in the “impact of past increases in Bank Rate increasingly push down on demand, and supply remains very weak.”
Breeden concurred with the MPC’s perspective that inflation risks pertaining to the August forecasts are “skewed to the upside”. She acknowledged that “second-round effects via price and wage setting are stronger than had previously been expected.” When it comes to growth and unemployment, Breeden sees a pathway filled with “balanced risks”, which could swing in either direction.
