Burgess: MPC growth forecast too optimistic

The Monetary Policy Committee's forecasts for UK real growth are too optimistic, while concern mounts over its inaction in raising rates to stem rising inflation, says Threadneedle's Mark Burgess.

The CIO predicts a UK GDP growth of 1.4% for end of 2011, below the consensus forecast of 1.9%, due to tightening fiscal policy and real disposable incomes not rising for five years. Revised figures show the UK economy contracted more than previously thought in the last three months of 2010, shrinking 0.6% rather than the previously estimated 0.5%. "Inflation will be elevated and way above target for at least the next six months but our view remains that the MPC's and the market's outlook for real growth is still too optimistic," says Burgess. Inflation hit 4% in January, double th...