He added: "The main test is yet to come with many of the pay agreements for 2011 yet to be settled - and future pay developments will play a critical role in determining exactly when and how quickly the Bank of England will raise interest rates. We expect wage growth will remain muted due to workers' weak bargaining position given high and likely to rise unemployment. This is a key factor underpinning our belief that the Bank of England will only raise interest rates gradually even if they act in the near term, which is looking increasingly likely."