City A.M. shadow MPC votes 7-2 against higher rates
ALLISTER HEATH | CITY A.M.
The case for a 0.5 percentage point hike in the Bank rate is clear. The unemployment level is plummeting and firms are reporting some of the most positive conditions on record. The dangers of emergency monetary policy are now increasingly obvious, especially in London’s property market
JAMES SPROULE | INSTITUTE OF DIRECTORS
The recovery remains weaker than many would hope, so the policy should not change this month. Unconventional policy is likely to have unforeseen consequences, so a rate rise is likely to be necessary before the economy is ready.
SIMON WARD | HENDERSON
Raise Bank rate by a quarter-point and signal likely further increases. Higher rates are needed to promote saving. Non-financial M1 (money supply) growth remains in double-digits while surveys suggest that the output gap is now positive.
GEORGE BUCKLEY | DEUTSCHE BANK
No change this month. It will be important to explain the future of guidance at next week’s Inflation Report. One option would be to ‘do a Fed’’, and say that rates will remain low well past the point at which the threshold is breached.
VICKY PRYCE | GOVERNMENT ADVISER
Hold rates. Recovery is spreading to other parts of the economy such as manufacturing and house building, along with sharp falls in unemployment. But wages remain subdued and inflation has fallen to target for the first time in four years.
ROBERT WOOD | BERENBERG BANK
No change. The recovery is gaining momentum. Business confidence is strong, inflation is under control. Forward guidance should be consigned to the bin, and a rate hike will likely be needed by late this year.
TREVOR WILLIAMS | LLOYDS BANK
Bank rate should stay on hold. Although the economy is recovering, output remains over one per cent below its peak and there is little price inflation pressure. Indeed, inflation could fall below target in the next few months.
SAMUEL TOMBS | CAPITAL ECONOMICS
Hold rates and adapt guidance to provide more support to the recovery. Unemployment is falling quickly, but there are no signs that inflationary pressures are building. Indeed, CPI looks set to fall well below the two per cent target this year.
ROSS WALKER | RBS
No change in Bank rate is required at the moment. My policy bias remains a tightening one, though the more benign inflation outlook lessens the immediacy of any changes to monetary policy.