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SHOULD THE MPC PAY ATTENTION TO THE STRONG UPTREND IN UK INFLATION ?

MICHAEL SAUNDERS | CITIGROUP
I doubt the MPC will totally dismiss the inflation upsurge because of the risk that its anti-inflation credibility continues to erode. Outside recession, an inflation targeting central bank cannot credibly ignore such large and repeated upside surprises in inflation data.

PHILIP SHAW | INVESTEC
We do not envisage significant concerns here, but positive signs on the economy should dissuade the committee from sanctioning any further asset purchases. While it is not impossible that the MPC backs more quantitative easing, we feel it is unlikely.

VICKY REDWOOD | CAPITAL ECONOMICS
Inflation is still headed to over three per cent and while the MPC seems happy to look through the temporary rise, the pick-up could keep talk of interest rate rises later this year alive. This week’s biggest clue about where policy is going may well be Mervyn King’s speech on Tuesday evening.