Analysis: on this occasion the MPC has decided the threat of inflation becoming embedded is greater than the risk to growth
The Bank of England is making a habit of pulling surprises. In November, financial markets were taken aback when Threadneedle Street kept interest rates on hold at 0.1%. This time they were caught on the hop by the decision to raise them to 0.25%.
It’s not hard to see why traders in the City have been left scratching their heads given that the explanation for doing nothing in November – uncertainty about the real state of the economy – seems to apply just as much to today’s circumstances.
