Economy in brief: November 2023

Bank predicts flatlining economy amidst sticky inflation

Although we were relieved that rates were held in the November MPC meeting, there was otherwise little optimism from the Bank of England. The Bank expects GDP will be flat over the rest of 2023 and all of 2024 (0% – well below average consensus expectations for 0.5%) – before growing at only a feeble rate in both 2025 (0.3%) and 2026 (0.8%). Despite weaker growth expected than previously predicted, inflation was revised higher, with the Bank noting upside risks to energy prices following events in the Middle East. The latest forward guidance from the MPC was expanded to include the line “monetary policy was likely to need to be restrictive for an extended period of time”. This is a more explicit signal that rates will remain higher for longer (the previous guidance stated that “monetary policy would need to be sufficiently restrictive