After a faltering start in its programme of rate rises, the Bank of England is catching up. Today’s half-point rise in its base rate to 3.5 per cent may be relatively modest compared with last month’s 0.75 per cent rise, but it is still twice as high as any rise the Monetary Policy Committee (MPC) was prepared to inflict on the economy during the first quarter-century of its existence.
The MPC has turned itself into a prisoner of the markets – if it does anything unexpected, there is likely to be trouble
In the space of three months rates have now been jacked up by 1.75 per cent. That is serious stuff. It is as if the MPC has suddenly woken up and told itself: look, the whole purpose of our existence is to control inflation. Not to stimulate economic growth, nor even to balance the often-competing interests of inflation and economic growth, but purely to keep the Consumer Prices Index as close to two per cent as possible.
Comments
Join the debate for just $5 for 3 months
Be part of the conversation with other Spectator readers by getting your first three months for $5.
UNLOCK ACCESS Just $5 for 3 monthsAlready a subscriber? Log in