Euro area slump prompts BOE to cut growth forecasts

London

THE Bank of England (BOE) has cut its forecasts for growth and said inflation could fall below one per cent in months as a renewed slump in the euro area weighs on the UK economy.

In its Inflation Report published on Wednesday, policymakers led by BOE governor Mark Carney forecast expansion of 2.9 per cent in 2015 and 2.6 per cent in 2016 - down from 3.1 per cent and 2.8 per cent in August. They also said inflation will return to the 2 per cent target in three years, effectively validating investors' expectations that rate increases may not start for almost another year.