The unrepentant governor
Mervyn King today said he had great sympathy for ordinary families who are seeing their real living standards squeezed by rising prices. But in his quarterly press conference he had little time for critics who say Britain's central bank should have done more to keep inflation in check.
A year ago, the Monetary Policy Committee was expecting the target measure of inflation would now be around 1%. Instead it is 4%.
But the governor said that nearly all of the overshoot could be explained by unexpected shocks - which had surprised the financial markets as well. If the Bank had raised rates to keep inflation on target - households would simply have been hurt by a shrinking economy instead.
In a letter to the chancellor yesterday, the governor had appeared to signal that rates would need to rise for inflation to return to target. Today he said the MPC would take it one month at a time.
But the forecasts show the Bank now expects growth to be slightly weaker than it did three months ago - and inflation to be higher. The implication is that bank rate will need to go up sooner than the MPC previously thought, and without such a strong economic recovery.