Yesterday’s rate decision – a 25bps increase – was welcomed by markets. Not because the increase will not be painful but because a 50bps increase would have signalled that reversing inflation is far from done.

In December 2021 – just 20 months ago – the Bank rate was 0.1%; yesterday’s increase took that rate to 5.25%. Although the level of interest rates is not high by historical standards, the sharp transition is something we have not witnessed since the late 80s.