There is no real reason for Bank of England to raise interest rates | Larry Elliott

MPC will go out of its way to reassure consumers and businesses but it is risky

The Bank of England has boxed itself into a corner. It has led the City to believe that interest rates will rise later this week and will pay a price if expectations are not met. Sterling, which has been looking sickly in recent weeks, will get a real thumping on the foreign exchanges if official borrowing costs remain at 0.5%.

In truth, there is no real reason to push up interest rates to 0.75%. The recent official figures for earnings, which some monetary policy committee members have been citing as a reason to act, have shown pay growth decelerating. Inflation is lower than the Bank thought it would be three months ago and the latest set of retail sales figures were weak.