The MPC-ometer is designed to predict the outcome of each month's MPC meeting based on incoming economic news and financial market developments. It forecasts no change in either Bank rate or quantitative easing plans at today's meeting.

The balance of news over the last month is judged to be neutral. Growth and financial market indicators have improved: business surveys are stronger, the stock market has rallied further and interbank interest rates have fallen. Inflation indicators, however, have weakened, with the headline CPI increase slowing sharply and first-quarter average earnings down by 0.1% from a year earlier.

The MPC last month expanded its quantitative easing programme to £125 billion, implying that Bank of England asset purchases will continue until the end of July. QE is intended to boost money supply growth. The latest monetary statistics suggest that the policy is working. A decision about a further extension will probably be deferred until next month's meeting.

The MPC's favoured money supply measure – broad money M4 excluding cash holdings of financial intermediaries – is estimated to have risen by a chunky 1.0% in April. Growth has been running at a 7.8% annualised rate so far in 2009, up from just 3.0% during the second half of last year.

QE works by boosting investors' cash holdings, thereby encouraging them to buy private-sector securities. This raises asset prices and makes it easier for companies to float new equity and bond issues. Corporations raised £13.6 billion from sterling capital issues in the three months to April, up from just £3.8 billion in the previous three months.

Stronger monetary growth supports hopes that the economy will stabilise soon. The recent pick-up, however, needs to be sustained to lay the foundations for an economic recovery in late 2009 and 2010.