Print

Mr Bean's predictions

Catherine Deshayes

The Deputy Governor of the Bank of England, Charles Bean, has forecast a fall in inflation.

Speaking at an international conference of central bankers in America earlier this week, Mr Bean did warn that the credit crunch could go on for some time yet if the money markets do not improve.

However, he said that the crisis is ‘transitory' and that things will get better in time.

"Should the recent slide in the cost of crude oil and other commodities continue, there is hope that the economy could return to growth next year.

"On the assumption commodity prices remain stable and if anything falls back, then inflation should drop back as we go through next year.

"One would hope that the conditions in credit markets should gradually start to improve, and those two factors will help to ensure growth will start to pick up as we go through next year.

"But the important thing is people realise this is just a transitory period of subdued growth and we will get through the other side and growth will resume to more normal levels.

"Hopefully we can go back to something like the steady growth that we experienced over the past decade," Mr Bean added.

Such a situation could give the Bank of England's Monetary Policy Committee (MPC) scope to cut interest rates, bringing own the cost of mortgages as a result.

When Bloomberg polled economists on August 22^nd, half of them forecast that this would happen before the end of the year.

This was twice as many as had thought that way when they were polled two weeks earlier, suggesting that confidence is starting to rise once more.