Philip Shaw Hold Quotations

Base rates will almost certainly remain on hold at 4.5%.

Last month's inflation report was about as strong an endorsement of steady rates as one is likely to see. The balance of news has turned around significantly over the past month and we now expect rates to remain on hold at 4.5% for the remainder of the year.

Our view is that base rates will remain on hold for the rest of the year, but that if there were to be a move, it would be down.

Overall, it would take some very weak data to trigger another cut. While this is not impossible, especially if consumption trends are weak, the balance of risks has turned and we now believe that base rates will remain on hold at 4.5 per cent for the rest of the year.

While we believe the recent run of stronger high street spending will peter out, a majority of MPC members may differ and we expect official rates to remain on hold at 4.5 percent.

Although it is clear the Bank is planning to keep rates on hold for now, our view is the MPC is still too optimistic on growth.