7th April 2011
Simon Ward, chief economist at Henderson, points out that the Monetary Policy Committee kept Bank rate unchanged at 0.5% despite evidence that the medium-term inflation outlook has deteriorated since the bank's inflation report in February.
He writes: "That report itself signalled a need for policy tightening, forecasting above-target inflation of 2.5% in two years' time if interest rates were held at 0.5%.
"The alternative projection based on market interest rate expectations was in line with the target but assumed that Bank rate would average 0.7% during the second quarter, implying a quarter-point increase in April or May."
Mindful Money economist Shaun Richards is blogging about the ECB rate rise here.