Global GDP growth has been strong over the past year. Business and consumer confidence measures are healthy, while commodity price rises are pushing up global inflation. Some monetary policy stimulus has started to be withdrawn in some advanced economies.
Output growth has risen in the years since the financial crisis as slack in the labour market has been absorbed. The MPC believes that little slack remains, while potential supply growth is forecast to be subdued.
Inflation was 3.1% in November, with the overshoot above the 2% target largely due to the effects of sterling depreciation on import prices. Global growth is strengthening while UK GDP growth is projected to remain steady.