There are also some tentative signs that conditions in the labour market are easing. The issue over the period ahead will be whether these latter forces prove sufficient to contain inflation in an economy operating with little spare capacity.
In these circumstances, the Board at its recent meeting judged the current policy setting to be broadly consistent with the economy's requirements for the time being. Looking ahead, however, it felt that on balance, based on the considerations I have outlined here today, it is more likely that the next move in interest rates would be up rather than down.