A May rate cut is more likely than not, but the Bank is likely to need to see ongoing signs of lower-than-expected targeted inflation as well as weaker than expected Q1 GDP growth.
On one hand you have very strong signals from businesses services, but on the other quite weak ones from the retail sector. That's going to drag overall services growth down.
The actual size of the fall in February is fairly significant. Obviously if the trend does soften in the next few months then the housing market could be losing some momentum.
The big picture here is that the Bank's forecasts for growth and inflation are different to consensus expectations for weaker growth and inflation short term.
We are becoming increasingly nervous about our call for a 25 basis point rate cut at the February ... meeting, even if we are not yet ready to throw in the towel and push back the next rate move to the spring.
Although further short-term support to the national figures from buoyant markets in London and the south-east is likely.
Our pessimism reflects a view that signs of strength in the consumer sector could soon start to peter out.
It is hard to argue that it will have a significant impact on monetary policy, given that Mr Lambert had voted with the majority throughout his time on the Committee and that the rate decisions over the next few months do not look like being close-calls.
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