Well there was plenty to chew on in the Bank of England’s monetary policy summary today - and none of it very palatable.
The 0.25 per cent bone thrown to the market dogs today will not keep them happy for long. The MPC toughened its language to pledge that it will “act forcefully” in inflation looks set to stay high longer than expected.
So it now seems highly likely that the pace of monetary trightening will accelerate through the rest of the year with 0.5 per cent very much on the cards for August meeting. With inflation now forecast to breach 11 per cent in October who knows where interest rates will sit by the end of the year - probably closer to three per cent than two per cent.
With the natural gas future contract for July trading at well over 300p a therm today families can be under no illusion that the worst of the cost of living crisis is over. Meanwhile petrol and disel hit new record prices yesterday.
But on the other side of the equation - and this is what makes the MPC’s job so hard - economic growth has completely fizzled out and a shallow recession now looks increasingly plausible. Even since May the Bank’s forecast for GDP in the second quarter of the year has been dowbngraded from a 0.1 per cent rise to a fall of 0.3 per cent.
The Chancellor’s package of support for less well off families, which starts to kick in next month, will boost GDP by 0.3 per cent and may be enough to stave off a second consecutive quarter of falling output. Even if it does the economy will do no better than bump along the bottom this year.
But amid all the sombre stuff there is a marginally more upbeat figure to take comfort from. Unemployment is forecast to rise - but only to 5.5 per cent, which may actually relieve some of the labour market bottlenecks driving employers up the wall at the moment. For those of us who remember the long scarring years of mass unemplyment in the Eighties and Nineties that is something to hang on to.