"British business and the financial markets had expected today's MPC decision to leave interest rates unchanged at 4.5%. Given the immediate uncertainties, we were not surprised that that the Committee has decided to take time to assess the economic circumstances, before taking action. However, it is critically important that the MPC should maintain a flexible approach, and should stand ready to counter the sharp slowdown in the pace of economic activity.
"Year-on-year GDP growth has been revised down to 1.5%, which is a 12-year low. Higher oil prices mean inflation has increased to above 2%. Unemployment has risen in each of the last seven months. The housing market weakening will continue to dampen consumer spending.
"With UK GDP growth firmly below trend, there is a clear risk that unemployment will rise further. Against this background, we believe that a further cut in interest rates may be needed later in the year. The MPC must signal clearly that if economic circumstances continue to worsen, they will not hesitate to act resolutely."