Case for inaction remains robust

The current weakness of domestic price pressures and the euro-zone’s continued malaise suggest that the MPC is likely to keep Bank Rate on hold for a few more months. But the Committee is unlikely to wait for all of the downside risks to the growth outlook to disappear or inflation to return to the 2% target before tightening policy. As such, we expect Bank Rate to rise in Q2 2015, a little earlier than markets currently anticipate.