City A.M. shadow MPC votes to hold rates

ALLISTER HEATH | CITY A.M.

“The time has come to raise bank rate to 0.75 per cent. With such obvious signs of strength emerging, and growth likely to rise in the third quarter, we cannot afford any more of the distortion caused by ultra-loose policy.”

GRAEME LEACH INSTITUTE OF DIRECTORS

“The economy is clearly strengthening, but as yet not enough to significantly reduce the output gap and warrant a change in interest rates or QE.”

SIMON WARD HENDERSON

“Hold rates but signal likely vote to tighten before year-end. Inflation in 18 months is very likely to exceed the knockout level without action soon.”

GEORGE BUCKLEY DEUTSCHE BANK

“Growth is recovering too quickly to loosen policy. But levels of output are too low and unemployment too high to tighten any time soon.”

VICKY PRYCE EX-GOVT ADVISER

“We should hold rates. Forecasts are being upgraded, but investment remains weak, and the Eurozone recovery remains fragile.”

ROBERT WOOD BERENBERG BANK

“We’re not out of the woods, with pay still not keeping pace with prices, but the economy is building momentum. Guidance is enough for now.”

TREVOR WILLIAMS LLOYDS BANK

“Headwinds from a rise in market rates or global shocks could throw the recovery off track. Bank rate should be held until recovery is entrenched.”

VICKY REDWOOD CAPITAL ECONOMICS

“With markets reluctant to believe forward guidance, the MPC needs to back up its words. Either cut bank rate or restart QE with an initial £25bn.”

ROSS WALKER RBS

“Solid activity data calls into serious question the merits of dovish guidance. Given market rate rises there is no need to raise bank rate yet.”