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Bank of England Inflation Report, August 2010

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Inflation Report – August 2010. The Inflation Report can be viewed as a complete PDF file or in sections. Click on the appropriate heading to access the file located on this page.

  • “At the time of the May Report, the financial crisis had evolved into a sovereign debt crisis in Europe. Given the subsequent fiscal announcements, and the publication of the European Bank stress tests, has that difficult time passed? Up to a point. But whereas crises occur suddenly, they fade only gradually. It will take many years before bank balance sheets and fiscal positions return to anything like normal. In the meantime they will act as headwinds to the recovery. But continuing monetary stimulus and the earlier depreciation of sterling will act as tailwinds. Looking ahead, the UK economy is facing a major rebalancing away from private and public consumption and towards net exports. Achieving that rebalancing, while confronting those headwinds, is likely to mean a choppy recovery. Indeed, short-run indicators of demand and output are already proving particularly volatile…business and consumer sentiment have shown signs of softening, measures of financial fragility remain elevated, and there is great uncertainty about the outlook for both the United States and our most important trading partner, the euro area.”
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