The testimonies to the Treasury Select Committee reinforce the impression that interest rates are set to remain on hold for several months to come.

This significantly reduces the prospects of any interest cut until at least August. Indeed, it increases the odds that the eventual next move in interest rates could be up.

We believe the door is opening for an interest rate cut early in 2006 if the economy fails to show sustained significant signs of improvement over the next couple of months.

It may not be long before we see another interest rate cut and this could account for the follow-through buying we are seeing today.

The MPC still has to see conclusive sustained evidence that 2006 pay settlements are remaining contained.

The data were firmer overall than expected,