Liz Truss stiffened the Bank of England’s resolve on inflation

It turns out there is nothing like getting your homework marked by a tough new teacher to make everyone concentrate a little harder. Over the last couple of weeks of her campaign to lead the Conservative party, Liz Truss has made one point again and again. The Bank of England has been far too relaxed about inflation. And, surprise surprise, it has suddenly got a lot tougher.

Today the Bank raised interest rates by half a percentage point, the largest single move in almost thirty years. Rates are now at the highest level in almost two decades. There was no great mystery about why. Inflation is already running at 9 per cent and, shockingly, the Bank predicted today that it would hit 13 per cent before it peaked. Optimistic forecasts that rising prices were merely temporary, triggered by the war in Ukraine, and would soon be back under control, have been blown away.