The Bank of England’s latest quarterly Inflation Report notes that inflation is now back at its long-term target of 2%.
Unemployment has fallen much faster than was anticipated, according to the Bank, with strong employment gains underpinning the early days of economic recovery.
This contrasts with the present lack of a significant pickup in productivity, which is so far yet to emerge.
In its report, the Bank states: “The UK recovery has gained momentum and inflation has returned to the 2% target.
“Reduced uncertainty, easier credit conditions and the stimulative stance of monetary policy should support continued solid economic growth.”
In terms of that ‘stimulative stance’, the Bank also gave some positive indications for borrowers who might reasonably be concerned about an increase in the base rate of interest in the months to come.
The Inflation Report cites “significant headwinds” to the UK economy, from both domestic and international influences, which are likely to keep the base rate low “for some time to come”.
Many economists do not expect to see the rate rise until at least the last months of 2014, with a large proportion predicting no change until next year.
And with rate changes frequently being made in the same month as the quarterly Inflation Report is published, the next prime candidate for an increase will be May.