Stop worrying about inflation, part two

A graph and a table for anyone who doubts the MPC's overconfidence.

The fan chart below depicts the probability of various outcomes for CPI inflation in the future. This is the famous fan chart.

The MPC's forecast by quarter -- based on market rates and £200bn of quantitative easing -- is reported in the first column. The second reports the probability that inflation will be below 1 per cent.

MPC's inflation forecasts
Year and quarter MPC inflation forecast % Likelihood of inflation being less than 1 %
2010 Q4 3.27 <5
2011 Q1 3.61 <5
2011 Q2 3.47 <5
2011 Q3 3.29 <5
2011 Q4 3.03 6
2012 Q1 2.12 21
2012 Q2 1.97 25
2012 Q3 1.94 27
2012 Q4 1.85 30
2013 Q1 1.83 31
2013 Q2 1.85 31
2013 Q3 1.9 30
2013 Q4 1.96 28

 

From 2012 Q1, inflation is below the target. There is a significant chance that inflation will be below 1 per cent. But this is all based on a very optimistic growth forecast that may not pan out -- and if it doesn't, inflation will be even lower. There is every likelihood that the MPC's forecast for growth will be lower in their new inflation report to be published next week.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

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New Digital Editor: Serena Kutchinsky

The New Statesman appoints Serena Kutchinsky as Digital Editor.

Serena Kutchinsky is to join the New Statesman as digital editor in September. She will lead the expansion of the New Statesman across a variety of digital platforms.

Serena has over a decade of experience working in digital media and is currently the digital editor of Newsweek Europe. Since she joined the title, traffic to the website has increased by almost 250 per cent. Previously, Serena was the digital editor of Prospect magazine and also the assistant digital editor of the Sunday Times - part of the team which launched the Sunday Times website and tablet editions.

Jason Cowley, New Statesman editor, said: “Serena joins us at a great time for the New Statesman, and, building on the excellent work of recent years, she has just the skills and experience we need to help lead the next stage of our expansion as a print-digital hybrid.”

Serena Kutchinsky said: “I am delighted to be joining the New Statesman team and to have the opportunity to drive forward its digital strategy. The website is already established as the home of free-thinking journalism online in the UK and I look forward to leading our expansion and growing the global readership of this historic title.

In June, the New Statesman website recorded record traffic figures when more than four million unique users read more than 27 million pages. The circulation of the weekly magazine is growing steadily and now stands at 33,400, the highest it has been since the early 1980s.