The UK economy continues to surprise on the upside. Broad money growth is consistent with medium-term trend rate GDP growth, although weak credit growth puts a question mark over the continued broad money growth outlook. Nevertheless, output growth should be at or above trend in the near term; while the rate of inflation – finally on target after four years above – should ease further. The Bank of England is likely to change its forward guidance when it presents next month's Inflation Report; presumably to a lower unemployment threshold and at least a commitment to keep interest rates low for a protracted period. That may be as much a mistake as its initial venture into forward guidance.