Compared with the May edition, the August Monetary Policy Report (MPR) forecasts faster, although still only subdued, growth, and a marginally weaker inflation profile. The projections are conditioned on a market-implied path for Bank Rate that declines gradually to 3.5 percent by the end of the projections in the third quarter of 2027.

In terms of the real economy, GDP is now expected to expand at a yearly rate of 1.5 percent this quarter, up a full percentage point from the May call, before slowing to 0.8 percent in a year's time. In the third quarter of 2026 growth is put at 1.4 percent (versus 1.3 percent previously), and at 1.7 percent a year later. This profile is deemed consistent with the unemployment rate climbing slowly from 4.4 percent this quarter to a peak of 4.8 percent in two years' time.

CPI inflation is expected to increase to around 2.75 percent in the second half of 2024 as declines in energy prices last year fall out of the annual comparison. In a year's time, the headline rate is put at 2.4 percent, down a tick from the May forecast, and at 1.7 percent in the third quarter of 2025, also a tick lower than previously. At the end of the forecast, inflation is seen at 1.7 percent and so still below target. However, there remains considerable uncertainty around the projections and widely differing views on the MPC about the extent to which persistent pressures might prove more enduring or continue to unwind as external cost pressures and inflation expectations normalise.

As reflected in the tight 5-4 MPC vote to cut Bank Rate, the especially high level of uncertainty surrounding the inflation outlook means that investors will pay scant attention to the revised forecasts. Indeed, many, if not most, on the MPC itself, will probably take today's update with little more than a pinch of salt.

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

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.