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mpc: 9 Second, the latest data implied a higher starting point for earnings growth than thought at the timeof the Inflation Report. Third, the oil price had risen further and would, unless it reversed, putfurther upward pressure on world and domestic prices. In addition, there were significantimbalances in the economy, and these might have implications for aggregate demand and inflation.On net trade, the trend was probably somewhere between the strong Q2/Q3 figures and the weakerQ4 data. Nonetheless, the balance between domestic demand and net trade looked at least asworrying as a month ago. The further deterioration in net trade should at some stage come to anend. But given the upward revisions over the past month to data for consumption and investment inthe middle of last year, more might now need to be done to slow the pace of domestic demandgrowth. A change in asset prices might bring about a re-balancing of the economy. For example,at some point the exchange rate might depreciate, or there could be a fall in the stock market orslower house price inflation. Unless these adjustments occurred, it might be difficult to re-balancethe economy. But it was uncertain whether these adjustments would occur smoothly. In the viewof some members, that pointed to a greater need to restrain domestic demand growth now. 33 For those members who attached significant weight to these factors, and especially for thosewhose February central projections for inflation were above target beyond the short-term, there wasa case for a further rise in interest rates of 25 basis points. However, there were also reasons forwaiting. First, it was possible that after a month some of the fog surrounding some recent datamight have cleared. For example, there were tentative signs in some of the housing activityindicators that the market might be turning, although some of the recent weakening might be due tomillennium effects. But, given the possibility of stronger bonus-affected earnings data over thenext few months, it was not clear that waiting would help to clarify the picture on nominal earningsgrowth. Second, it was not possible to do a full analysis of the Budget yet, so it might be prudent towait before drawing a firm conclusion on the implications for inflation. Third, a rise in interestrates this month would come as a surprise to the markets. The market expectation was that interestrates would not move this month, but would still rise by the summer. It was possible that anincrease in rates now might be seen as implying a lower path for interest rates in the future. But arise in interest rates risked pushing up the market's interest rate expectations and hence sterling ­which would exacerbate the imbalances in the economy and push inflation further below target inthe short run. Overall, the considerations for these members were very finely balanced betweenraising interest rates by 25 basis points this month and waiting to see more data and analysis. Forthese members, it was best to keep interest rates unchanged this month. 34 For other members, the recent economic data did not suggest the need to change interest ratesthis month. Despite attaching some weight to the stronger economic data discussed above, therewere data that pointed the other way. Again, different members placed different weights on thesevarious factors. First, although the mix of stronger domestic demand and weaker net trade looked