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MPC not panicking yet

The Monetary Policy Committee is coming under fire for leaving policy unchanged – as it did again today – in the face of rising near-term price pressures. But we doubt that the Committee has much to gain by raising rates to 0.75% or 1%, while a bigger increase could prove catastrophic for the economic recovery. Although the chances of an interest rate rise this year have clearly increased, we think it more likely that the MPC continues to sit tight.

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