"After yesterday's shock inflation figures British business accepts that a Bank Rate increase to 5.50% in May is necessary in order restore credibility in the anti-inflation strategy. But calls for a 50 basis points increase to 5.75% are misguided and potentially dangerous.
"The increase in headline average earnings to 4.6% is worrying but should not be exaggerated, as it was largely due to higher bonuses. Excluding bonuses average earnings growth remains benign. The MPC minutes published today confirm our view that the Committee was preparing to raise rates even before the March increase in CPI inflation became known.
David Kern concluded: "Higher interest rates are already causing considerable pain. The squeeze on consumer disposable incomes is intensifying, and the surge in sterling is squeezing exporters' margins, in spite of the partial offsetting benefits resulting reduced costs of imported raw materials. The MPC must curb the upsurge in inflation, but must avoid monetary overkill that may cause long-term damage to business."