Faisal Islam: How high will interest rates go?

Why have they raised now? High and rising inflation risks a further cycle of self fulfilling expectations of rising prices. It hasn't been seen so far, however. The war has lasted for 9 months, and led to oil prices used in the forecast averaging $108 a barrel.

And yet on the day they have announced the rate rise, the oil price is actually 13% lower than that having fallen in the run up and after the US mid term elections, reflecting expectations or guesses that President Trump will now retreat or deescalate from the Iran war.

The other notable factor is that the UK economy is performing much better than forecasts and expectations. This is underlined by the Bank of England's latest forecasts.