Given how far price inflation is above the Bank of England’s, ignored, target reason would suggest a hold.

However, I see four possible flies in the no-cut ointment.

1. Having finally dawned on King that the economy has been deteriorating since last year, he now decides to play catch up. Look at the change since the May Inflation Report. As a result he gives in, listens to David Blanchflower and, might even, go overboard.

2. Price inflation is close to peaking, if it hasn’t already. Last year the Commodity Index indicated it would peak Q2-Q3 this year. It did. The trend is down and sideways for another year-and-change, at least. Which also fits with the pattern of the 1959-1975 RPI secular bull.

3. A co-ordinated effort to provide base rate back-up to the hodge podge of “panic” housing measures announced yesterday.

4. It is now accepted as a given that they won’t cut. It is not on anyone’s radar. So surprise factor might count for something. The contrarian in me suggests that adds weight to the cut argument.

The economy is tanking. Per capita RPI adjusted GDP contracted about 1.12% in the year ending Q2. Even per capita GDP using the Government’s calculation method contracted 0.15% quarter-on-quarter in Q2.

Sterling is already going down the crapper, after all the real value of the currency is slightly less than toilet paper anyway.

Sterling weakness certainly makes a good case for not cutting. Then again a weak currency would be good for exports. And exports are the only chance of having anything good happening with the GDP figures.

The Japan-deflation scenario that I put at a 1-in-10 chance in October 2006 and which fell to even money at the start of this year is now looking odds on as the chill winds of the Kondratieff Winter bite.

All this suggests to me that there is more chance of a cut than is being accounted for. Which is why “I think there is a 60% chance they’ll surprise and cut“. Which forces me in to the “they’ll cut” camp.

Whether they cut tomorrow or next month, there is one thing you need to pencil in to your economic almanac.  Prepare now for Sterling and the US Dollar to fight it out to be the carry trade currency of the next decade.