NIESR sees UK GDP Growth at 3-Year Low in July

The National Institute of Economic Social Research (NIESR) estimates that UK GDP grew 0.1% in the three months to July, the slowest rate since 2005. The think tank was spot on in predicting that growth would slow to 0.2% in the second quarter by correctly assuming that Retail Sales would fall in June. While quarterly growth of 0.1% would put annualized expansion at the slowest in at least 15 years, NIESR contends that the Bank of England will not cut interest rates to support growth with inflation substantially above target levels. This forecast may require revision in the coming months as the effects of falling crude oil prices filter into the broad economy, easing price pressures. This may give Mervyn King and company room for monetary easing, which would help check the slide in GDP growth. Traders will closely monitor the language of the upcoming Bank of England policy announcement for signals alluding to how soon a rate cut may be expected.