AMI calls for MPC caution

Nia Williams

January 8, 2010

Robert Sinclair, director of AMI, said: “It is no surprise that the base rate remains unchanged in the absence of any data that suggests action is required. With £7bn left in the quantitative easing programme, the economic data in the next few weeks will set the tone for interest rate decisions in the coming months.

“It will be important for the committee to consider carefully what components might be driving inflation. Future inflation may be demand led through the amount of cash in the system, or supply side led through increasing VAT, oil and fuel costs and perishable goods following the adverse weather conditions. Only if it is demand led should the committee use the interest rate tool at this point in the recovery.”

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