The MPC voted 8-1 for unchanged rates in October (one vote for a 25 basis point cut) against our MPC-ometer’s 7-2 forecast. The one vote miss is in line with the model’s average forecast error over the last year. The minutes indicate that the Committee will give serious consideration to cutting rates in November. Three factors are likely to be important in determining the outcome.

The first is the preliminary estimate of GDP growth in the third quarter, released tomorrow. Empirical analysis shows that the early GDP estimate is a significant influence on MPC decisions. (This partly explains the tendency to move rates in the middle month of a quarter.) In its 10 year history, the Committee has never cut rates when quarterly growth has been 0.7% or higher. Indeed, there is only one example of a cut following a 0.6% GDP increase (in November 2001, just after the 911 terrorist attack).

The second key influence will be forward-looking growth components of business and consumer surveys for October released over the coming fortnight. The MPC is likely to give greater-than-normal weight to survey evidence given its belief that the “credit crisis” represents a negative shock to economic activity. September results were surprisingly resilient – most measures of confidence and future activity remain above their long-term averages. Significant weakening is necessary to justify a pre-emptive rate cut.

Thirdly, most MPC members will be keen to see greater evidence that inflation expectations have peaked before voting to cut rates. Business survey price balances were generally still strong in September and recent increases in wholesale oil and gas prices are concerning. As noted in the October minutes, the sharp fall in headline CPI numbers since the spring has yet to lead to any moderation in consumer inflation expectations.

I think the hurdles for a November cut are high but will continue to be guided by the MPC-ometer – it currently suggests stable rates but fewer than half of the components are available.