Cazenove's Jeffrey: Central banks still spooked by the ghosts of the past

First UK rate rise in decade this month

The recent increase in interest rates announced by the Bank of England leaves us with no more clarity about the direction of monetary policy than we had before the micro-adjustment.

Indeed, the increase raises rather more questions than it resolves.  Ostensibly, the 0.25% move simply reverses the rather ill-judged post referendum cut. However, we have no clear understanding of whether we are at the start of a sequence that will see regular increases in rates along a path towards normalisation or, alternatively, whether this move was simply a nod to those worried about inflation becoming more embedded.  If the former, how will the sequence emerge; if the latter, to what extent will the Monetary Policy Committee's (MPC) nerve be tested by future trends in consum...