The Bank of England is expected to raise interest rates again on Thursday (PA) (PA Wire)

Later today, all who care fully expect the US Fed to raise interest rates for the first time since the pandemic.

On Thursday, the Bank of England will press ahead with its own rate hike plan, possibly taking rates from 0.5% to 1% all at once (City split on whether to will be a more modest increase of 0.25 points).

The purpose of rate hikes is in theory to fight runaway inflation. But in truth, this horse has long since run away.

Bank of England Governor Andrew Bailey can slam the stable door as hard as he wants, and that still won’t detract from the truth that his organization has been too slow on this.

Which raises the question of what is the point, beyond saving face, of increasing borrowing costs right now.

Given that UK inflation is now set to hit 8% this summer and will be felt at higher levels than in poorer countries, small basis point increases won’t make much of a difference.

If central banks were serious about fighting inflation, they would have to make very large rate hikes of two points at a time.

This would hurt economic growth, which in turn would lead to lower inflation.

Since they’re not going to be that radical, why even care?

The minutes of the monetary policy committee meeting tomorrow will make exceptionally interesting reading. Which of the nine band members made exactly this point?

Those of us who thought last year that, since it had more information than anyone else, the Bank must be right that inflation was just a passing problem , now know better.

At this point, the only really valid argument for raising rates is that there is something to cut later, when the real economic fallout from the situation in Ukraine starts to show.