Last week it was announced that in August the rate of inflation returned to zero, about where it has spent most of this year. It is expected to remain there for some months to come. So why would the monetary policy committee of the Bank of England even think about raising interest rates now, let alone, in my case, vote for an increase in each of the past two meetings?
The MPC has to set policy not on the basis of inflation now, but in the future. It takes up to two years for the full effect of a change in Bank Rate to feed through the economy, so we need to consider inflation prospects into 2017 when making our decisions now.
A good deal