Philip Shaw Month Quotations

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.

The strength of high street activity during the month (November) reflects an abrupt turn in the weather driving demand for winter wear.

Both the input price and prices charged components are up on the month as well so this reduces the chance that rates will come down over the next couple of months.

The next move in rates will be a cut. There is some uncertainty over whether rates will be brought down as soon as next month but we would not be at all surprised if it happens.

The fall in unemployment is a bit of a surprise. There are no signs for the time being that wage inflation is picking up although the numbers next month will be critical.