MPC should ignore the noise and avoid another rate hike

By the time the Bank of England's interest-rate-setting Monetary Policy Committee (MPC) announces its latest UK base rate decision on Thursday, seven weeks will have elapsed since they elected to nudge the country's borrowing costs up from near-zero to 0.25%.

By their pricing, financial market futures are sending a clear signal that the Bank will indeed raise the country's base rate again, likely to 0.50%. However, there are a number of very distinct reasons as to why even this faint nudge on the tiller may be inappropriate. The Committee's remit is to bear down on inflation when and where necessary, and to bring it into the envisaged 1%-3% target range over the medium term. Looking purely through this very narrow lens, the decision should be straightforward. The UK's latest inflation data, for December, showed headline CPI surging by 5.4% on...