IN a straight fight between, on the one hand, an inflationary partnership of weak central bank and a big spending government, and on the other, the bond market, there can be only one winner. It is the bond market every time.
The MPC, like their US brethren, went on a mad rate cutting splurge. Unfortunately, the yield on 20 year government paper didn't feel like following. In fact, in recent weeks, the rate has started to creep up slightly.
Just wait and see what happens when the BoE starts buying up UK government paper. Investors will quickly start to dump it, leaving the BoE with the unenviable choice of either buying up the excess supply in order to keep yields low, or letting long term rates increase.
Of course, this kind of money financed fiscal expansion has been tried before. It always fails.