Using austerity economics to crush UK inflation would be a cure worse than the disease | Richard Partington

Caution needed rather than panic measures over short-term risks after credibility of government and Bank of England hit

For more than a year Britain has been trapped with the highest inflation rate in four decades. Rather than making serious inroads to shift this uncomfortable fact, the past month's economic developments have turned the country to panic.

The view in the City is the Bank of England has lost control. After a parade of bad news, leaving it backed into a corner, the central bank's latest rate increase was as much a plea to financial markets to be taken seriously again as it was an inflation-busting tactic.