Highlights
Compared with the February edition, May's Monetary Policy Report (MPR) forecasts slightly higher, but still only subdued, growth, and just a marginally weaker inflation profile. The projections are conditioned on a market-implied path for Bank Rate that declines from 5.25 percent to 3.75 percent by the end of the projection period, up from an endpoint of 3.25 percent last time.
In terms of the real economy, GDP is now expected to have expanded 0.4 percent last quarter and to rise a further 0.2 percent in the current period. In the year to Q2 2025, growth is put at 0.9 percent (versus 0.6 percent in February) and at 1.2 percent (1.0 percent) in Q2 of 2026 and 1.6 percent in 2026. Output is expected to be below potential over the entire forecast.
Annual CPI inflation for the same quarters is seen at an unchanged 2.0 percent, then 2.6 percent (2.7 percent), 1.9 percent (2.2 percent) and 1.6 percent. Second-round effects in domestic prices and wages are expected to take longer to unwind than they did to emerge but to do so slightly faster than assumed previously.
In line with recent MPR editions, financial markets are unlikely to put much faith in the May update.
In terms of the real economy, GDP is now expected to have expanded 0.4 percent last quarter and to rise a further 0.2 percent in the current period. In the year to Q2 2025, growth is put at 0.9 percent (versus 0.6 percent in February) and at 1.2 percent (1.0 percent) in Q2 of 2026 and 1.6 percent in 2026. Output is expected to be below potential over the entire forecast.
Annual CPI inflation for the same quarters is seen at an unchanged 2.0 percent, then 2.6 percent (2.7 percent), 1.9 percent (2.2 percent) and 1.6 percent. Second-round effects in domestic prices and wages are expected to take longer to unwind than they did to emerge but to do so slightly faster than assumed previously.
In line with recent MPR editions, financial markets are unlikely to put much faith in the May update.
Definition
Formerly called the Quarterly Inflation Report, the Monetary Policy Report (MPR) is produced by the Bank of England (BoE) every February, May, August and November. The publication updates the central bank's assessment of recent economic developments at home and abroad and sets out the latest official forecasts for growth and inflation. As such, it provides the economic underpinnings for any change in monetary policy made by the Bank's Monetary Policy Committee (MPC). The MPR is released at the same time as the BoE makes its policy announcement
Description
For analysts who want to know the Monetary Policy Committee's latest thinking on the economy, the MPR provides an in-depth guide. As such it offers key information on economic trends and, in particular, areas where the Bank is primarily focused. The MPR is discussed at a press conference held by the BoE governor shortly after its release.
