We are running out of time to save the economy

Editorial: The fate of the economy and the Sunak administration lies to a large degree in the decisions that the Bank of England takes in the coming weeks

The most helpful thing the politicians can do is to support the Bank, not interfere (PA)

The Bank of England is facing its toughest decision since at least the end of the pandemic – and one that will have momentous consequences for the next election, as well as the economy and living standards.

The unexpected stubbornness of inflation clearly points to a rise in rates by the Monetary Policy Committee. The question now is how large the hike should be.

Whereas before now the Bank has stuck to its preferred path of predictable and gradual “baby step” increases of a quarter percentage point every two months or so, such is the seriousness of the situation that there is much speculation about a “shock and awe” rise, pushing the rate to a full 5 per cent – its highest since 2008. Indeed, the money markets are now viewing a half-percentage point rise as a distinct possibility, so disappointing has the trend in prices become.