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Inflation will come in clearly below its 2% target in 2 years time (1.8%) based on market rate expectations, the BOE said in its latest Inflation Report. Even on unchanged 0.5% Bank Rate, inflation will be somewhat below target in 2 years time, at 1.9%. The BOE assumes a very gradual rise in rates, with Bank Rate seen at 0.7% in Q3 next year, 1.0% by Q2 2013 and 1.4% by Q4 2013. The report clearly implies that the MPC sees little chance that a rate hike will be needed in the near term. The report reiterates that there is a 'range of views' among MPC mmebers on the outlook and stresses the deterioration of the global economic outlook.
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