"Given the worsening domestic and international risks, any increase in rates would have been extremely dangerous. But simply keeping rates on hold today is not enough, if the decision is interpreted as a mere short-lived postponement. The MPC must acknowledge that further interest rate increases should now be off the agenda, at least for the time being.
"UK inflationary pressures have eased recently, and we have seen falls in both CPI inflation and in average earnings growth. The turmoil on the international credit markets is likely to worsen global prospects. More seriously, the increase in inter-bank rates could make vital credit costlier and less easily available. This situation already entails tighter monetary conditions, and is particularly dangerous for small firms."
"We are not yet calling for an immediate cut in interest rates, but such a move should not be ruled out. The balance of risks has changed for the worse. The pressures facing UK businesses are now mounting, even before the impact of five interest rate increases over the last twelve months have been fully felt. The economy is set to slow sharply in 2008. To avoid damage, we expect the MPC to act promptly to restore confidence."