Persistently over-target inflation – currently at 4.5pc – has led to speculation that the Bank will soon have to move to slow the pace of price rises, in order to maintain people's faith in its commitment to meeting the 2pc target set by the Government. However, switching gears now would mean the Bank is effectively admitting that past policy has been inappropriate, said Stephen Lewis, the chief economist at Monument Securities. His argument is that if the Monetary Policy Committee members raised interest rates at their meeting this week, it would throw into question their past inaction, given that inflation has been ... (full story)