Sports Calendar

I am voting for a rate increase this month as I am concerned that inflation expectations are drifting upwards. The outlook for global growth is good, equity markets have been resilient to the rise in bond yields and the composite UK purchasing managers index is consistent with a UK economy running at around 3%.

Even after a year of rate increases the Bank’s quarterly inflation expectations index remains at its highest level in 5 years. As inflation expectations tend to be sticky, there is a risk that they remain elevated even if the actual inflation rate declines in the coming months.

I see this as a precautionary hike. There is limited evidence of a slowdown in consumer spending and the housing market has so far failed to respond to tighter UK monetary policy. The extra squeeze on household finances from another rate hike and the delayed effects of refinancing of fixed rate mortgages at higher rates – so far the average interest rate rise for UK mortgages is only about one third of the 1% increase in the base rate since July 2000 – should be enough to force adjustments in overstretched household balance sheets.

Recommendation: quarter-point rise

Geoffrey Dicks

Chief UK economist, Royal Bank of Scotland Financial Markets

With four hikes under our belt I see no pressing case for raising rates this month; if rates do need to go up again the August forecast round would be the right time to do it.

Recommendation: No change

Anatole Kaletsky

Chief economics commentator and Editor at Large, The Times

At least one more rate increase is clearly necessary to be reasonably confident of hitting the inflation target - and if a rate increase is necessary, I can see no conceivable argument for further delay.

Recommendation: quarter-point rise

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive