BoE Warns of Sharp '08 Slowdown

In a gloomy report, the Bank of England signals slower growth, higher inflation, and lower interest rates are in store for Britain next year

The Bank of England did not use the trendy new word "slowflation" in its Inflation Report yesterday, but it is clearly signalling a combination of slower growth, higher inflation and lower interest rates for the UK next year -- "not an outcome we've seen very often" in the words of the Bank's Governor, Mervyn King. Indeed, the Bank already believes that "GDP growth may have begun to slow in the fourth quarter", with what Mr King termed a "dichotomy" between the housing and financial sectors, hit by the credit squeeze, and the rest of the economy.

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