Stephen Nickell remained the lone voice on the Bank of England's Monetary Policy Committee calling for a rate cut, as the rate-setting body voted 8-1 to leave interest rates unchanged at 4.50 pct on March 9, the minutes to the meeting revealed.
This was the fourth month running that Nickell, whose term on the MPC is due to end on May 31, called for a quarter point rate cut.
Nickell continued to maintain that the central bank's projections for output given in its February Inflation Report were too optimistic He argued that the fall in GDP growth below its trend level for much of the past eighteen months, the recent rise in unemployment and the surveys of capacity utilisation pointed to a "degree of spare capacity" in the economy.
There was continuing evidence of weak investment intentions, a recent weakening of consumption indications and "subdued prospects for real labour income", he felt.
Nickell also continued to believe that inflation will fall below the Bank of England's 2.0 pct target once the effect of higher energy prices fell out of the year-on-year calculations.
The majority disagreed, however, arguing that it was appropriate to leave rates unchanged given that the outlook was, on balance, for continued growth near trend and inflation close to target.
They also noted that output indicators suggested that GDP growth would be above trend in the first quarter of 2006, pointing in particular to strong activity in the business services sector.
On the outlook for consumption, the MPC felt that although various indicators of household spending had been weaker, this "might not be giving a complete guide to aggregate consumption", which might "prove to have been firm in Q1".
If consumer spending growth had been weak in the first quarter, then there may have been some rebalancing towards other components of demand. Investment indicators seemed to have remained weak and it was therefore more likely that net exports helped to fill the gap, given robust global growth, they said.
They noted, however, that it was possible output growth might eventually prove to have been weaker.
For some members, the risks to consumption were on the downside, and the softer data since Christmas suggested that these "might be crystallising". For others, however, there remained some upside risks given the apparent strengthening of the housing market at a time when GDP growth was recovering.
There was still "little evidence" of second-round inflationary effects on wages from the rise in energy prices, and earnings growth "remained benign".