The Bank of England's interest rate is likely to stay at 4.5 per cent, where it has been since last August, to judge from evidence yesterday by Mervyn King, the Bank's governor and four of his colleagues before the Parliamentary Treasury Committee.
Mr King said the Monetary Policy Committee expects inflation to stick close to its two per cent target and economic growth to remain steady.
He identified energy prices as the biggest risk.
Mr King said the MPC kept interest rates steady because there were risks in both directions to its projection for inflation forecast.
"A major risk to the outlook for growth and inflation comes from energy prices," he said.
"Past increases in oil and gas may have eroded the supply capacity of the economy and altered the balance between demand and supply."
He pointed out big rises in household bills by British Gas and other utilities could push inflation above the target in the medium-term and slow the growth in consumer spending. The MPC had to watch for signs of this feeding into higher pay demands.
"Looking ahead, the MPC will monitor carefully developments in the labour market and measures of inflation expectations," he said.
A dissenting voice came from Steven Nickell, who has repeatedly recorded a solitary vote on the Bank's committee for a quarter-point cut, arguing without it growth will fall short of the Bank's central projection.
He also doubts if energy prices will push inflation up as much as his colleagues on the Committee, but is due to leave the MPC in May.
Another committee member, Kate Barker said she had considerable sympathy with some of Mr Nickell's views, but remained unconvinced that high energy prices will not feed into higher pay.
"In the short term, the reason I haven't voted for a cut in interest rates is that I remain concerned about the second-round effects," she said.
"At the moment, in particular as the economy is doing reasonably well, I don't see the urgency for rate cuts."
She said she saw the economy as having slightly less spare capacity than the half to one per cent margin seen by Mr Nickell.
MPs asked Charles Bean, the Bank's chief economist, whether the need to fund pension deficits was holding back business investment.
Mr Bean declined to make the link, saying: "There isn't any strong indication that firms with large pension deficits relative to their sales have acted as a drag on investment".
Mr King blamed lack of competition within continental Europe for the leap in British gas prices this winter.
He warned: "We still face the prospect of remarkable volatility in gas prices for at least 12 months and that is some concern, particularly to firms."
Although supplies through the new pipeline being built from Norwegian gas fields may not arrive until 2007 Mr King said: "Norway has always been a source of comfort to the UK as a supplier of raw materials and I suspect it will come to our rescue again."