The UK consumer price figures for December have certainly thrown the cat among the pidgeons. Repeating a pattern which has now been seen for many months, the figures were not just bad, they were also worse than the markets or the Bank of England expected. In a reversal of the normal order of things, there are suggestions that the government might now see a political case for higher interest rates, while the monetary policy committee still prefers to keep rates at close to zero. Whichever way you look at it, this is a tricky moment for the Bank, but it is probably doing the right thing. Read more
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