16:46 08 August 2012
The Bank of England have signalled that they have little faith in the UK's immediate recovery from the effects of recession and financial scandals: they've just slashed their growth forecast to nothing at all.
The quarterly inflation report has stated that it expects no growth for 2012. It had predicted a 2% increase a year ago and then 0.8% in May.
Such news is considered a strong signal that the double-dip recession is intensifying. Many have called for an interest rate cut to help weather the storm.
At a news conference, Sir Mervyn King dismissed this idea: "Another quarter point [cut] on bank rate is not going to be the difference between having a recovery and not having a recovery."
King went on: "The big picture is that output's been flat for two years, and has continually disappointed expectations of a recovery.
"We are navigating rough waters and storm clouds continue to roll in from the euro area.
"Unlike the Olympians who have thrilled us over the past fortnight, our economy has not yet reached full fitness."
He admitted that "there's still a long way to go".
Regarding inflation, King added: "CPI inflation has continued to fall from its high of 5.2% last September, reaching 2.4% in June, and is expected to fall further this year.
"Twice in the past four years inflation has risen above 5% as a result of external price pressures. On both occasions the Committee said that inflation would fall back, and on both occasions it has ... Inflation is likely to fall further from its current level to be around or a little below target for much of the forecast period, as the impact of external price pressures eases, and domestic cost pressures remain subdued. At the forecast horizon, the risks to inflation around the 2% target are broadly balanced"
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