CITY A.M. | SHADOW MPC EDGES CLOSER TO A RISE IN INTEREST RATES

ALLISTER HEATH | CITY A.M.
“With consumer price index inflation of 4.4 per cent and heading upwards, it’s time to end over two years of ‘emergency’ levels of interest rates. The Bank rate should be edged up by 0.25 per cent this month.”

SIMON WARD | HENDERSON
“Half-point rise. The economy has rebounded solidly in early 2011 while wage settlements are picking up and sterling has weakened. The February Inflation Report implied that an increase was necessary so why delay?”

GEORGE BUCKLEY | DEUTSCHE BANK
“The combination of economic recovery and persistent inflation questions the need for ‘emergency’ interest rates. A small rise would retain an accommodative stance while at the same time begin normalisation.”

GRAEME LEACH | IOD
“Raising rates now will have little or no impact on 2011 inflation, but a considerable impact on GDP growth. Despite inflation, there is little or no evidence of a wage-price spiral, and broad money growth is anaemic.”

VICKY REDWOOD | CAPITAL ECONOMICS
“I still don’t think a rate rise is needed for the UK. The rise in oil prices will push inflation up further in the near-term. But the extra squeeze on real incomes will make it more likely inflation drops further ahead.”

TREVOR WILLIAMS | LLOYDS TSB
“Given global uncertainty and impending fiscal tightening, I think rates should be left at 0.5 per cent. Once it is clear what is happening to demand, then I believe that rates should go up – probably, later on this year.”

HOWARD ARCHER | IHS GLOBAL INSIGHT
“Hold rates. Consumer spending is a concern, fiscal tightening really kicks in from April and high oil prices are a threat to growth. With pay muted, we see little risk of a damaging wage-price spiral developing.”

JAMIE DANNHAUSER | LOMBARD STREET RESEARCH
“A sustained recovery is not assured here. Premature withdrawal of monetary stimulus is a risk; but the inflation outlook has deteriorated further recently. A rate hike is imminent but not warranted at this meeting.”

VICKY PRYCE | FTI CONSULTING
“Hold rates. Inflation expectations need managing but raising rates will have little effect. Real wages are falling, the employment path is uncertain and confidence weak. Manufacturing in February was at standstill.”