It would have been better to have left the growth forecast unchanged, but that would have lowered the inflation forecast to below its target. They are having to work hard not to have to cut interest rates.
Retailers are playing a cat and mouse game, ... they try to build their margins back up, but then have to reverse price increases.
Looking ahead, rising gas and electricity bills could keep inflation close to current levels for the next few months. But we expect further falls in core inflation and fading energy effects to push the headline rate well below target in the second half of the year.
The MPC has acted early and aggressively. The soft landing scenario is still on track.
A dovish Inflation Report tomorrow and soft retail sales on Thursday could open the door to a March rate cut.
Today's cuts add a bit of pressure, ... but they're not the key factor. We're at dramatically different stages of the economic cycle (from Europe), and there are perfectly good reasons for the MPC to lower rates aggressively regardless of events on the Continent.
Interest rates are very likely to remain on hold for a seventh consecutive month in March, it being the only month in which the MPC has never changed rates in either direction since taking control in 1997.
There are no very significant indicators that the market is getting too expensive.
Italy is going to remain at the back of the performance tables. We should see a pick-up in growth this year, but it is coming off a very low base. It is a cyclical recovery rather than any kind of real structural improvement.
The downturn in the High Street might be past its worst, but spending is still growing at pretty modest rates.
