Last month, our old friend Mervyn King wanted to raise rates, but the majority of the MPC were afraid that a sudden hike might spook the financial markets. The minutes of last month’s BOE Monetary Policy Committee meeting revealed a far closer vote to raise rates than the market anticipated. Going forward, a further interest rate hike in July looks like a certainty.
The BOE had to confront further bad news today. The UK's Money Supply raced ahead at a 13.8 percent annual rate. Meanwhile, the bank's regional survey indicated that the UK economy was suffering from capacity constraints everywhere. It all points to significant inflationary pressure.
Higher interest rates on the way, slowing housing market; there is light at the end of the tunnel; the bubble is about to burst.