When Rishi Sunak first started pledging that he would halve inflation by the end of the year, it must have seemed a no-brainer.
The level of inflation isn’t in his gift; he can nudge it perhaps, but it’s really down to the Bank of England and consumer behaviour.
But that didn’t matter. Few people would get that point and the Bank’s action on interest rates meant inflation was bound to fall. Easy win, he thought.
It’s looking less and less like a result at this point.
For him to hit his target we might need a mortgage-crash induced recession. Inflation begins to look like it is ingrained rather than a passing problem.
Which leaves the slow-moving Bank of England playing catch up by rising rates in the teeth of a recession (ideally, it should be able to do the opposite). Some in the City are now pencilling in rate rises every time the Monetary Policy Committee meets between now and Christmas.
Supposing that still doesn’t work? That the costs of everything apart from houses are still rising?
That increasingly looks like a plausible scenario. At some point, the Bank would have to acknowledge that putting interest rates up isn’t having the desired effect.
It should pause for thought for a few months and see how things look then.
The Sun reported the other day hardly any of the Bank rate-setters have a mortgage themselves on property worth £13 million.
How hard it is to pay one might be passing them by.
