The Monetary Policy Committee (MPC) faces a particularly tricky task when it meets this month. On the one hand, the economy only just limped out of recession at the end of last year. But on the other, inflation is rising more sharply than expected. On balance, we think that the MPC will pause this month. But if, as we expect, the rise in inflation is temporary and the economic recovery continues to disappoint, the Committee may yet have to give the economy more support.
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