Bank must be careful about raising mortgage costs in current climate

The UK economy can do little more than recover lost ground and this is not enough to spur inflation

Recent speeches by Bank of England policymakers have focused on the power of the central bank to influence inflation.

Mark Carney said today in Sheffield that such was the strength of the UK economy, prices would soon start to rise, allowing the central bank to raise rates. A deflationary spiral, feared by some economists, was possible, but rising wages and a higher pound (increasing import costs) would spur inflation, next year if not this.