welcome. let me start with the situation welcome. let me start with the situation as we see it on the outlook situation as we see it on the outlook for the economy. the outlook for growth outlook for the economy. the outlook for growth and unemployment has improved~ for growth and unemployment has improved. six months ago we expected a shallow improved. six months ago we expected a shallow but long recession. since then energy prices have fallen substantially and economic activity is holding substantially and economic activity is holding up better than expected. so today is holding up better than expected. so today we forecast modest but not positive so today we forecast modest but not positive growth and a much smaller increase positive growth and a much smaller increase in positive growth and a much smaller increase in unemployment. we think inflation increase in unemployment. we think inflation will fall quite sharply over inflation will fall quite shar
this may expected in the february report. this may reflect rebuilding of margin this may reflect rebuilding of margin such as wage growth and effects margin such as wage growth and effects of margin such as wage growth and effects of higher energy and other import effects of higher energy and other import costs. the extent to which firms import costs. the extent to which firms pass import costs. the extent to which firms pass on these costs will influence firms pass on these costs will influence the rate at which it declined influence the rate at which it declined. while cpi inflation is expected to fall quite sharply as energy expected to fall quite sharply as energy costs begin to ease albeit at a somewhat sore layback slower pace than projected in february the outlook than projected in february the outlook for inflation is uncertain and depends on the extent of persistence and wage and price setting persistence and wage and price setting. as shown in chart eight in