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

Getty
Show Hide image

Donald Trump vs Barack Obama: How the inauguration speeches compared

We compared the two presidents on trade, foreign affairs and climate change – so you (really, really) don't have to.

After watching Donald Trump's inaugural address, what better way to get rid of the last few dregs of hope than by comparing what he said with Barack Obama's address from 2009? 

Both thanked the previous President, with Trump calling the Obamas "magnificent", and pledged to reform Washington, but the comparison ended there. 

Here is what each of them said: 

On American jobs

Obama:

The state of our economy calls for action, bold and swift.  And we will act, not only to create new jobs, but to lay a new foundation for growth.  We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.  We'll restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost.  We will harness the sun and the winds and the soil to fuel our cars and run our factories.  And we will transform our schools and colleges and universities to meet the demands of a new age.

Trump:

For many decades we've enriched foreign industry at the expense of American industry, subsidized the armies of other countries while allowing for the very sad depletion of our military.

One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind.

Obama had a plan for growth. Trump just blames the rest of the world...

On global warming

Obama:

With old friends and former foes, we'll work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet.

Trump:

On the Middle East:

Obama:

To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West, know that your people will judge you on what you can build, not what you destroy. 

Trump:

We will re-enforce old alliances and form new ones and unite the civilized world against radical Islamic terrorism, which we will eradicate completely from the face of the earth.

On “greatness”

Obama:

In reaffirming the greatness of our nation we understand that greatness is never a given. It must be earned.

Trump:

America will start winning again, winning like never before.

 

On trade

Obama:

This is the journey we continue today.  We remain the most prosperous, powerful nation on Earth.  Our workers are no less productive than when this crisis began.  Our minds are no less inventive, our goods and services no less needed than they were last week, or last month, or last year.  Our capacity remains undiminished.  

Trump:

We must protect our borders from the ravages of other countries making our product, stealing our companies and destroying our jobs.

Protection will lead to great prosperity and strength. I will fight for you with every breath in my body, and I will never ever let you down.

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland