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mpc: 26 For some members, a rise of 25 basis points in the Bank's repo rate was warranted now. It was likely that there was already a degree of excess demand in the economy, which was apparent in indicators of capacity utilisation, producers' pricing power and output price inflation. Although there were doubts about the near-term strength of consumer spending, indicators of output growth remained robust. With the prospect of import prices no longer falling, the pressure of excess demand on domestic supply would most likely feed through into higher CPI inflation, even if improvements in the functioning of the labour market had lowered the rate of unemployment at which these pressures would be felt. Sterling market interest rates had risen over the month, tightening credit conditions somewhat, but the Committee could not rely on that continuing unless it validated these revised expectations. A modest rise in interest rates now would help to pre-empt inflationary pressures and an increase in interest rates this month would not be a major surprise.