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SHOULD THE MPC BE WORRIED ABOUT THE RISE IN INFLATION EXPECTATIONS?

MICHAEL SAUNDERS | CITIGROUP
"Signs that high CPI and RPI figures are lifting inflation expectations are bound to worry the MPC. The MPC takes the inflation target seriously and it cannot stand by if it loses credibility. So far, longer-term inflation expectations remain fairly stable, combined with early fiscal tightening will keep the MPC on hold for now."

ALAN CLARKE | BNP PARIBAS
"Several members of the MPC have voiced concerns that the current elevated level of inflation could threaten expectations and these concerns will have been validated to some extent by these data. It was an uncomfortable reading but it is flashing amber rather than a red alert at this stage."

SIMON HAYES | BARCLAYS CAPITAL
"High headline rates of inflation need not be a problem if they are understood to be temporary, and the MPC has been at pains to highlight the temporary factors at play. However, if high rates of inflation lead to a rise in inflation expectations this may instill further persistence into the inflation rate."