Sir Alan Budd, former chief economic adviser to the Treasury and former Bank of England MPC member

I think that rates should be unchanged. The MPC should not seek, yet, to expand its asset purchase programme beyond £125 billion and should continue to buy assets at its current rate. There has been some unexpectedly good news during the past month as far as future output and demand are concerned and the MPC should wait to see how its very considerable policy expansion is working.

Bronwyn Curtis, Head of Global Research, HSBC

Given the improvement in the economic data and markets, there isn’t a need to convince the markets that more ammunition is needed at the moment. I would not be voting for any change in the £125bn asset purchase programme, which will support the bond market until September. On rates: No change is necessary. It is difficult enough to explain what is happening with QE without making changes in the Bank rate too.

Geoffrey Dicks, former chief UK economist, RBS

Rates on hold (for foreseeable future). On quantitative easing: I expect the final £25bn will be brought into play in due course but, this month, with most indicators telling us that the worst is behind us, they can afford to do nothing. Where it was right, tactically, in the early stages of the recession for the MPC to be hyper-active, announcing a base rate cut or some extra QE every month, the tactics should now be to play it longer, less frenetically.

Professor Charles Goodhart, London School of Economics. Former Bank MPC member

We are currently in a Potemkin recovery, more appearance than reality. It is fuelled by a relief bounce in the stock market, relief that the spectre of Armageddon in the financial system has been banished, and by the inevitable, but temporary, turn around in the inventory cycle.

Meanwhile, the reality remains that households will want to reduce indebtedness, and (Anglo-Saxon) governments will soon be forced to do so.

In this context the underlying monetary data remain dire. Money holdings of (non-financial) corporations and households had no increase in April, (household 12 month growth now down to 3½ per cent from a usual 8 per cent; corporates still negative), and bank loans to corporates and households also showed zero growth. The adverse monetary headwinds continue to blow at gale force.

Obviously, against this background, the MPC will, and should, leave the nominal official interest rate unchanged. The continuing bad monetary data would make me want to consider raising the volume of QE further; and I would advocate shifting asset purchase away from gilts towards private sector assets as far as possible.

But I would not propose increasing the planned volume of QE just yet. First, it is still early days. Second, current relative euphoria over the Potemkin recovery is so great that it might give an incorrect signal to markets. An expanded QE programme will probably soon be needed, but for the time being press ahead with the current exercise.

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