The government now carries the revenue risk if fares undershoot expectations.
Of course, as inventories can often undershoot final sales, they can overshoot as well.
Before the Budget it was thought the chancellor might have some wiggle room due to a borrowing undershoot of several billion pounds this financial year.
Lagarde will unveil fresh economic projections in her press conference today, which are likely to show that inflation in 2022 will still undershoot the ECB’s target of almost 2%, even if prices are expected to rise steadily after bottoming out next year.
Of this undershoot, the chancellor has put £750m into this year's departmental spending.
With growth perkier than expected, borrowing looks set to substantially undershoot the OBR forecast.
In the euro area investors still expect the ECB to undershoot its inflation target over the next five years.
Only two months ago, the Central Bank was predicting that this year's inflation rate would undershoot its central target of 6%.
DaimlerChrysler, the world's fifth-largest car maker, gave warning that profits for 2000 would undershoot despite second-quarter results exceeding expectations.
The firm continues to undershoot its own projections: in January it said it would be profitable by the end of the year; now it says profitability will arrive in 2022.
This implies that GDP will increase by only 2% this year, a significant undershoot from the forecast of between 2.25% and 2.75% which Gordon Brown made in his March budget.
Projections of the growth in the number of households have been cut back, so that from now on the government expects demand to undershoot construction, for the first time in years.
The investment bank says, "not only has the Fed clearly hinted that it would allow an inflation overshoot to compensate for the undershoot but recently it has sounded even more dovish."
That may spare countries where house prices have clearly overshot from a painful bust, but it may also mean that some markets end up mimicking Japan’s long descent and badly undershoot.
Since 2013, research by Llewellyn Consulting shows, inflation has tended to undershoot these targets on a sustained basis in the US, the euro area, Sweden and Canada, while in Japan the trend set in earlier.
Catarina Midoes and Guntram Wolff of Bruegel, a think-tank, find that since 2010 officials, when drawing up budget plans, have consistently come up with predictions for tax revenues that turn out to undershoot reality.
“For now, the BoE maintains a very close watching brief but is continuing discussions on what further policy easing could be deployed, including the idea of negative interest rates, should a bigger and persistent undershoot of the 2% inflation goal threaten.”
"Our findings suggest that unemployment may be close to peak and may even undershoot official forecasts, especially given the reported fall in the supply of overseas workers," said Gerwyn Davies from the Chartered Institute of Personnel and Development (CIPD), which carried out the survey with recruitment firm Adecco.
In a clear indication of the determination of the world’s most powerful central bank to avoid Japan’s decade-long struggle against deflation, Powell said the persistent undershoot of inflation in recent years was a cause for concern and risked a cycle in which the expectation of falling prices dragged the actual rate of inflation down.
Today an inflation surge has made a mockery of the Federal Reserve’s forecasts; a parliamentary committee has said that the Bank of England has a “dangerous addiction” to buying bonds; and everybody expects the European Central Bank (ECB) to undershoot, over a period of years, its shiny new “symmetric” inflation target of 2%, unveiled in July.