Philip Shaw Rates 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.

Last month's inflation report ... (was) about as strong an endorsement of steady rates as one is likely to see.

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.

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.

Our view continues to be that unless the economy veers sharply from its present course one way or the other, base rates will remain at 4.5 percent for the rest of the year.

The debate over rates will continue to intensify over the coming months, not least as the committee has received downside surprises from output and upside surprises from inflation.

We think the door is still open for a cut in rates over the next two months, perhaps as soon as next month.

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.

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.

This underpins our view that interest rates will have to come down again although the MPC caution on inflation suggests that's not going to happen until early next year.

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.

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.

Economic news since the 4 August easing has been a mixed bag and consistent with rates remaining on hold.

If there are any signs that the economy will grow at or above trend, then the MPC will be even more reluctant to cut interest rates again.

The figures are significantly better than expected and may call into question whether the MPC will raise interest rates at its July meeting. Clearly there are no inflationary pressures in the near term.