The world economic prospect has on balance continued to weaken. The extent and duration of the slowdown remain uncertain. In the UK, final domestic demand has so far remained firm, but output growth in Q1 was slower than expected and there has been some weakening in business confidence. The labour market remains tight. While the latest data showed faster earnings growth, this was largely the result of temporary factors, and settlements remain broadly stable. More generally, price and cost pressures are subdued. As the Committee noted a month ago, inflation is currently somewhat below target, and is expected to remain so for a while.