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mpc: 8 At the same time, final domestic demand in Q3 had slowed, and inflation remained below the 2½% target. The Committee discussed the implications of these developments. 29 On one view, the repo rate should be increased by 25 basis points this month. Various considerations were advanced to support this view, with different members of the Committee placing differing weights on the factors identified. 30 For some, the choice this month was between raising rates by 25 or 50 basis points, but on balance there was no need to move by more than 25 basis points now. Since the previous meeting, the change in the economy had not been dramatic. The strengthening in the outlook for the world economy, especially in the euro area, had produced better balanced growth in the UK, but meant that domestic demand growth would need to slow further from its present 3%-3½% annual rate if it were to be sustainable. In addition, a more generalised pick-up in world activity might place further upward pressure on commodity prices. While the very fast growth in narrow money in December seemed largely to reflect transitory factors, the credit figures were more of a concern. The sharp pick-up in borrowing for consumption, from 2% of personal disposable income at the start of 1999 to almost 5% in Q3, coupled with house prices and equity prices well above the central projection in the November Inflation Report, would tend to support robust consumption growth. This would put upward pressure on inflation in the future, despite a further rise in sterling and a welcome recovery in estimates of productivity growth to rather closer to the long-run trend. With annual retail sales growth remaining around 4%, further pressure would be placed on resources in the short term if investment recovered following the millennium change. In addition there was now some evidence that the tightening in the labour market was beginning to feed through into earnings. Average earnings in the private sector were growing at more than 5% on a year earlier, implying earnings growth well above the central projection in the November Inflation Report. Nevertheless, with inflation at present subdued, the costs of waiting a further month before deciding whether a further change in rates was going to be needed were small; the February Inflation Report provided an opportunity to carry out more analysis. Given the uncertainties, a tightening of policy this month by 25 basis points was the appropriate response. 31 Other members of the Committee agreed that an increase of 25 basis points was needed this month, but felt the outlook, particularly for inflation, was rather more benign. The pace of domestic demand appeared to be slowing and the recent news on GDP growth was in the surprisingly strong export figures, where the economy still had considerable room for growth. Inflation was still