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Inflation is back to the target of 2 per cent at last. But don’t expect a cut in interest rates from the Bank of England’s Monetary Policy Committee, which meets on Thursday. All the signals are that it will hold off at least until its next meeting at the beginning of August.

So how come interest rates were put up to bring inflation back to target, but now it’s on target, the Bank is not going to start bringing rates back down? From a political point of view, it must be a bit galling for the Government. Had it waited a bit longer before calling the election it would have been able to say that both that it had delivered on inflation, and that the benefits in terms of lower rates were starting to come through.

From an economic point of view it would be a relief to businesses, consumers and home buyers to see that the corner had clearly been turned. We all need a bit of a lift.

But, standing back, it may not make that much difference on either count. Voters have made up their minds, and as long as rates do come down in August, waiting another six weeks is not such a big deal.

We all know what is going to happen, and you can see signs that people are anticipating the decline in rates. For example, the housing market seems to have perked up a bit, with the Land Registry reporting that prices are climbing again and in April were up 1.1 per cent on a year ago.

In any case, there is a respectable reason for thinking that while interest rates will come down a bit in the coming months, they will remain relatively high for the foreseeable future. There is concern that headline inflation has dipped as a result of one-off factors, and that underlying inflation is still a real concern.

That 2 per........

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