CITY A.M. | SHADOW MPC STILL DIVIDED OVER INTEREST RATES
ALLISTER HEATH | CITY A.M.
“Quarter per cent rise. Despite some concerning economic data, the economy is expanding, albeit modestly, and creating jobs. The time for “emergency” low rates has passed, and inflationary pressures persist.”
SIMON WARD | HENDERSON
“Raise to one per cent. Higher inflation is becoming embedded: the value-added deflator, which excludes import costs and taxes, climbed 2.4 per cent annualised in quarter one. Trend growth may be sub-two per cent.”
GEORGE BUCKLEY | DEUTSCHE BANK
“Raise by 0.25 per cent. Despite signs that the recovery has slowed, the combination of high inflation, generally rising output and highly accommodative monetary policy suggests that interest rates are too low.”
GRAEME LEACH | INSTITUTE OF DIRECTORS
“Hold. With the money supply and the economy so weak, raising interest rates is the last thing the Bank of England should be doing. We have a short-term inflation problem and a medium term risk of deflation.”
VICKY REDWOOD | CAPITAL ECONOMICS
“Given the continued signs that the recovery is struggling, interest rates should be left on hold. Indeed, if the data remains this weak, the case for re-starting quantitative easing will strengthen.”
TREVOR WILLIAMS | LLOYDS TSB
“Hold, though a rise will be necessary by year end. Encouraging net exports, but investment remains weak and recovery is slowing. Modest pay settlements and weak broad money growth suggest inflation will slow.”
HOWARD ARCHER | IHS GLOBAL INSIGHT
“Unchanged interest rates are warranted given the economy’s current softness, serious concerns over the consumer, and fiscal tightening. Pay remains muted and we see little risk of a wages-price spiral.”
JAMIE DANNHAUSER | LOMBARD STREET RESEARCH
“Keep rates on hold. Sentiment surrounding the UK has become too bearish. Second quarter GDP could surprise on the upside. That said, the big picture, of sluggish growth and limited inflation risks, has changed little.”
VICKY PRYCE | FTI CONSULTING
“Hold. The IMF may have said that policy is about right but warned of downside risks. Economic data still generally weak and forecasts being revised downwards. Only thing to watch is rising private sector wages.”