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mpc: 11 signs of inflationary pressure. Nevertheless, the weaker indicators in the past month were perhaps more forward-looking than the stronger. It remained to be seen whether the weakness in the activity surveys and the tick up in inflation expectations simply reflected a temporary lowering of confidence associated with the disruption to petrol supplies, or were indicative of an underlying weakening in sentiment which would persist. Another month's data would help to resolve this issue, and would cast further light on the puzzling behaviour of the labour market. Further information on the Government's fiscal plans would also probably become available in the pre-Budget Report. On balance therefore, and given also that any change in the repo rate this month would surprise the markets and put further upward pressure on a sterling exchange rate already nearly 2% higher than in the August Inflation Report projection, it was right to wait for some of these uncertainties to be resolved. 29 On another view, there was felt to be no case for a rise in interest rates now. The labour market picture was more encouraging, even though the recent negative contribution from bonuses was not expected to persist. More significant was the rate of growth of regular pay, which was not on this view inconsistent with current levels of tightness and with continued steady growth of employment. Recent outturns in earnings growth had been well below the projection in the August Inflation Report and the surge in pay growth associated with the millennium would not be repeated. The labour market did of course represent a risk to the outlook, but it had been tight - without generating inflationary pressures - for sufficiently long that it was better to react when there was clear evidence that those risks were beginning to materialise than to act against them on the basis only of a forecast. More important, on this view, was whether the pace of productivity growth would remain above its historical trend. The fact that the various measures of domestically generated inflation were at or below the inflation target was also helpful as it suggested less risk of breaching the target if the exchange rate were to fall. In addition, the current stance of policy was already slightly contractionary on the basis of estimates of the neutral level of interest rates. Dynamic monetary conditions indices suggested also that the past and current levels of sterling and of interest rates would continue to provide tightening monetary conditions for up to two years. A more substantial uncertainty on this second view was the outlook for the oil market and for the world economy. The prospects for a soft landing in the US and for stronger growth in the euro area, the basis for the projected gentle slowdown in world growth, had reduced and were the main risks to the UK inflation