This move was hardly surprising. There is widespread agreement among economic commentators that while a cut in rates would be warmly welcomed across most sectors of the UK economy, the MPC is in no position to make such a move when inflation continues to rise (subscription required). Our latest inflation forecasts (subscription required) show that RPI is expected to peak at 4.7% in the third quarter of 2008.

The extent to which inflation expectations might influence pay awards remains a crucial concern for the MPC. "The Bank is primarily concerned about wage and price setters," according to David Page of Investec Securities quoted in a recent article on FT.com.

Latest IRS pay data (subscription required), published last week, showed that the median basic pay award rose to 3.5% for the three months to 31 July 2008, up from the revised figure of 3.3% in June. However, with RPI also rising (to 5%) (subscription required) pay awards are still failing to match the increase in prices.

• If you are actively involved in your organisation's pay-setting process, we would like to invite you to take part in the 20th annual IRS Pay and Benefits Bulletin Pay Prospects survey of UK private sector reward practices. Each year, this major study looks in detail at how private sector employers set their annual pay review and reward priorities for the coming year. Taking part in our research allows you to compare your expected pay award and reward practices with those of other organisations. The closing date is Thursday 18 September 2008.