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Economists react to Bank of England MPC notes

Economists in the UK have reacted to the Bank of England's MPC notes from the last meeting which indicated that all members were in favour of retaining UK base rates at 0.5%. However, the discussion regarding the potential threat of inflation in the UK and the potential threat from European debt issues was also something which was discussed in great detail. As a consequence, a number of leading economists in the UK have stepped forward with their views.

Slowly but surely there is a growing belief that UK base rates will increase in the latter part of 2010 at a rate potentially faster than many people had assumed only weeks ago. Inflation is currently at 3.7% after rising from 3.4% and there are concerns that it could move higher in the short to medium term. Trying to balance the risk between increasing UK base rates too quickly, and killing the recovery, or maintaining low rates and seeing inflation move out of control is not something which will come easy.

The UK economy is proving very difficult to forecast and there is a growing feeling that one more economic collapse around the world could have far reaching consequences for the worldwide economy. The Greek budget deficit has drawn the attention of investors to the problem of sovereign debt and this is an issue which will drag on for some time to come.

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