BOE Warns Of Two Years Of Stagflation

BOE Warns Of Two Years Of Stagflation

The Bank of England will this week admit for the first time that it is set to breach its inflation target in the coming months and warn that Britain is destined for two years of soaring costs and weak growth.

Mervyn King, the Bank's Governor, is poised to unveil new forecasts showing that the Consumer Price Index (CPI) will rise above 3 per cent over the next six months, forcing him to write a letter of explanation to the Chancellor. In a further blow to Alistair Darling's credibility, the Bank will cut its economic growth forecasts for both this year and next.