Looking at the current economic environment in Britain, one of the key factors propelling recent inflation levels above the Bank of England’s (BOE) 2.0 percent target is abovetrend (higher than 2.5 percent) GDP growth. Credit Suisse projects an overall 2.8 percent GDP reading for Britain in 2007, with inflation forecast at 2.4 percent on a year-over-year basis.
Recently released first quarter 2007 GDP data came in at 2.8 percent year-over-year.
“That is off its recent high at 3.0 percent in the fourth quarter 2006,” notes Paul Kasriel, director of economic research at Northern Trust Company in Chicago. “There is some moderation, but still relatively good growth.” “Growth is very robust in the UK,” adds David Powell, currency analyst at Ideaglobal in New York.
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