Sir Alan Budd

Former chief economic adviser to the Treasury and founding member of the Bank’s MPC

HOLD

I vote for no change. I believe that a cut in rates will be appropriate in due course but for the moment the MPC can wait to be sure that inflation is approaching its peak and that there are no second-round effects from the rise in inflation that we are currently experiencing.

Bronwyn Curtis

Chair of the Society of Business Economists

HOLD

Ugly is the best way to describe the economic news over the last month. Activity data has gone from bad to worse and CPI inflation could reach 5 per cent following recent announcements by the major utility companies of around 25 per cent price increases.

I do not see the need for a 0.25 per cent hike in the Bank rate as a “shot across the bows” to make sure inflation expectations are contained. While I acknowledge that this is a huge jump in inflation, the Citi/YouGov inflation expectations survey shows a fall from 4.6 per cent to 4.2 per cent on the year ahead measure and longer term expectations were also lower. This suggests that both businesses and employees anticipate having limited pricing power.

Wage growth remains muted on all measures and bargaining power should weaken further as demand falls. This will limit the possibility of second round effects and inflation will fall back in 2009.

Consumers are also aware that they have to tighten their belts having been bombarded with news about the precipitous fall in house prices, the credit crisis and the faltering economy.

Geoffrey Dicks

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