Worse than expected

After last week's announcement that the Bank Of England was increasing the rate of its quantitative easing schedule,it was becoming obvious that their worries in Thread needle street about the recovery.

I wrote at the time that the inflation report of this week would give a more rounded picture.

The report states that there are reasons to be optimistic,the injections of money,the depreciation in sterling and the point in the stock cycle.However there is still a great deal of uncertainty as the causes of the recession are unusual.

As a result predictions are difficult.

However it sees decline on a higher level than the Chancellor at a round 4.5 per cent this year and sees no growth until the middle of 2010.

Moreover inflation will stay well below the 2 per cent government guide with the bank predicting that it will fall to 0.5 per cent.

The markets have taken the news badly.The Ftse is currently down 1.83 per cent and sterling has fallen 1.5 c against the dollar and three quarters of a cent against the euro