The Stock Market, Capacity Uncertainties and the Outlook for UK Inflation

Abstract

In this speech, Sushil B. Wadhwani argues that expectations of earnings growth and stock market performance are still high, which implies that a further downward valuation adjustment may be necessary over the medium term. He also discusses some of the recent difficulties associated with assessing supply capacity, and argues that the tendency for prices to come in lower than the Bank's model appears to imply that there might be less inflationary pressure than has been assumed.