IMF warning leaves no room for manoeuvre

The IMF's warning to the country this morning shows what little room for manoeuvre the monetary policy committee has for altering the level of interest rates this morning.

It has reduced its growth forecasts to 1.4% this year and 1.15 for next year and warns that inflation could well tip 5%

"So far in 2008, evidence points to a sharp slowing in activity alongside high inflation "Second-quarter growth was weak, forward-looking indicators are gloomy, sterling money market spreads remain elevated, unemployment has edged up and house prices are falling rapidly."

On top of that it warned that the government was in danger of losing credibility if it made a too-drastic revision of the fiscal rules.There have been rumours of it moving the goal posts to breach the magical 40% of GDP figure