Inflation could soon be too low. But the Bank of England is afraid to cut interest rates

For the past three years we have been plagued by inflation and we have been told that, as painful as it may be, the Bank of England must raise interest rates – to a 14-year high.

Starting next week, we could read that inflation is now even too low. This change in direction will probably make little sense to non-economists, and also to most people who are aware of how much more expensive almost everything is (bills, beer, insurance, taxis).

But there is a growing feeling in the City that consumer price index (CPI) data for April next Wednesday will be below the 2% target.

It is questionable whether 2% is a good inflation target at all. Many academics either say 3% would be better, or that we simply should not be so attached to the target, however we set it.

But apart from that, the consensus is that inflation is around 2% and could possibly rise above that again in the next few years.

Capital Economics is one observer that goes even further, predicting that the average inflation rate between now and the end of 2026 will be 1.1%.

If this assumption is correct, then the Bank of England should surely cut interest rates now rather than waiting for the evidence to become apparent.

There was general agreement that the Bank was raising interest rates far too slowly in the face of rising inflation.

It now looks as though the cut may be too slow given falling inflation. It is hard to escape the conclusion that the Bank's Monetary Policy Committee does not want to be the first major central bank to cut interest rates.

It would like to be supported by the US Federal Reserve or the European Central Bank through interest rate cuts in order to be able to follow this example.

If there is any truth in this suggestion, it is cowardice on the part of our interest rate setters.

The bank should start reducing credit costs as soon as possible.