MPC to hold fire while inflation remains high

With the Monetary Policy Committee (MPC) still waiting to see how the effects of its past asset purchases pan out, no change in policy is likely this month. The MPC’s fears of a rise in inflation expectations are also likely to linger a bit longer. But it is clear that the Committee is fully prepared to loosen policy further if required. We continue to expect another extension of its quantitative easing (QE) programme later this year.