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Anatole Kaletsky, Chief Economics Commentator, The Times

No change this month in rates or QE

Rupert Pennant-Rea, former Deputy Governor of the Bank of England; Chairman, Henderson

Economic data across the world are inevitably mixed, so the puzzles for policymakers are not yet getting easier. But the passage of time is itself helping, and not just because it allows policy changes to take effect; companies and households are also gradually improving their own finances, which is ultimately the surest base for sustainable recovery.

In purely monetary terms, what have been the effects of interest-rate cuts and QE? Here too, the figures are hard to interpret. The raw data show that M4 grew by only 2.4 per cent in the 12 months to April; but when the Bank tries to gauge the underlying trend, it concludes that M4 this year has been growing at an annual rate of almost 8 per cent.

Against this background, the MPC can afford to pause. It still has headroom to expand its QE programme; if it wants to send a signal, it can say that it would seek Treasury authority to do more if need be. As for interest rates, any change — up or down — would be bizarre and confusing.

Sir Steve Robson, former Second Permanent Secretary to the Treasury

Hold the rate. There is no compelling evidence of a need to move in either direction. On QE I think it would make sense for the Bank to go to £150 billion especially if it used the fire power in the corporate bond market rather than on gilts — where the benefits are pretty limited. The real issue is whether a recovery in the economy will be sustainable. I fear it will not be. Little or no progress has been made on the underlying causes of the crisis — namely the global imbalances and the associated excess leverage in many economies. In the UK the authorities seem unwilling to recognise this issue. The policy seems to be no more than hoping something will turn up.

Sushil Wadhwani, former external MPC member

The MPC should do nothing new this month. It announced an extension to quantitative easing just last month, and with "green shoots" sprouting in various places, it is best to "wait and see" for the moment.

Though growth in the monetary aggregates has remained subdued, policy needs to be focused on the developments in the economy as a whole, and over the past few months there has been a quite sharp change in the short-term outlook for the UK and global economies. The failure to sort out the difficulties in the global banking system and the likelihood that deleveraging will continue should prove to be an impediment to sustainable GDP growth over the medium-term. However, as long as our banking difficulties do not get worse, a cyclical recovery should be possible. Of course, if the cyclical bounce appears to fade and/or deflation risks increase, one can engage in more QE.

Martin Weale, Director, National Institute of Economic and Social Research

On rates: I see no case for a change. On quantitative easing: The balance between risks and benefits is fairly fine. The case for further action is much weaker than it was a month ago, because there is a general impression that output is now much more stable. It remains my view that, if any change is made, it should be to give a better focus to QE, by supplying credit directly to business rather than spending more money in the way the Bank has been spending it.

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