The fudging is over, as monetary policy committee predicts 10.2% inflation

theguardian.com:

At least the Bank of England has stopped dancing around the idea that inflation will hit double digits this year. Back in March, the prospect wasn’t spelled out starkly; instead, there was a warning that the peak would be “several percentage points” higher than the 7.25% previously forecast. Now there’s no fudging: 10.2% is the official forecast for the fourth quarter of this year.

And, frankly, the figure should surprise nobody who has been tracking wholesale energy prices and projections for household bills, where the open question is how close the price cap (currently £1,971, having been £1,277 at the start of this year) gets to £3,000 when it is next revised in October. The Bank used £2,800 in calculations, which was entirely reasonable since half the six-month measurement period for calculating the cap has already passed.

That, though, was as far as the clarity in communication extends. The gloriously unclear part is Threadneedle Street’s plan to cope with 10% inflation, a sight not seen for 40 years. The pound sank two and half cents against the US dollar, which qualifies as a huge one-day movement and one that probably can’t be explained solely by the gloomy economic forecasts. A slice of the currency weakness may owe something to the confusion within the monetary policy committee about its next steps.

Three members wanted to raise rates by a half-point immediately, yet two others thought it was “not appropriate” to sign up to a statement that said, gently, that “some degree” of further tightening in monetary policy might still be needed in coming months. Nobody should expect consensus on the MPC (and group-think would be terrible), but the gap between the doves and hawks has rarely looked so wide.

A generous