The Bank of England’s interest rate hike isn’t enough

There would have been times when the news ‘Bank of England doubles interest rates’ would have been met with a shudder. But when the move takes rates merely from 0.25 per cent to 0.5 per cent it hardly ranks as a shock at all. The days when the base rate reached 15 per cent seem as far away as ever. Rates remain far lower than was considered normal before the banking crash of 2008/09. Prior to that, rates had not been below two per cent in 300 years.

So, no, the Bank of England is not responding aggressively to rising inflation. It has not even begun to climb out of the emergency stimulus environment into which it plunged us 13 years ago – even though the economy is now growing rapidly, employment is at near-record levels and inflation is over five per cent. 

Does it have the balls to employ interest rates to bring the Consumer Prices Index to where it should be, according to the duty placed on the Monetary Policy Committee by the government? It is hard to see rates even going to two per cent.