Article: Another turn of the screw; Interest rates.(The interest-rate rise)

Why the Bank has raised rates despite low inflation

THE Bank of England tightened monetary policy a further notch on February 5th, raising the base rate from 3.75% to 4%. The 48-year low of 3.5% reached last July is now receding into folk-memory.

The decision had been widely expected: the surprise would have been if the Bank had sat on its hands. Yet in America, the Federal Reserve is keeping the base rate at 1%; in the euro area, the European Central Bank is under pressure to cut rates from 2%. So why is the Bank of England, which was first to turn the screw last November, ahead of the game again?

The main reason is that Britain weathered the ...

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