The letter attributes the overshoot entirely to world commodity price pressures. It is disappointing that there is no acknowledgement of the role of excessive monetary growth in accommodating the impact of these pressures on domestic prices.

Mr. King implies policy settings have been appropriate because money spending grew by 5½% in the year to Q1 2008, in line with its average rate of increase since 1997. However, spending expanded by 6¼% pa in the two years to Q3 2007, when domestic monetary conditions were arguably too loose. This was about one percentage point above a level consistent with achievement of the inflation target. (The deflator for money spending has risen about ½% pa faster than the CPI over the long term. Allowing for trend growth of 2¾%, this suggests money spending should expand by 5¼% pa to hit the 2% CPI inflation target over the medium term.)

Bizarrely, while ignoring the past role of high monetary growth, Mr. King cites a recent slowdown in the broad money supply as a reason for expecting inflation to return to target.

The 12% fall in sterling since last summer is given as a reason for expecting inflation to rise significantly further in the near term. However, MPC members, including Mr. King, have previously expressed satisfaction with a lower exchange rate, arguing that it was necessary to “rebalance” the economy.

Unsurprisingly, the letter implies current official rates are appropriate, balancing upside and downside risks. Any hint of a bias would have raised the question of why rates were not moved at the meeting less than two weeks ago.

An especially shocking feature of today’s figures was the further surge in RPIX inflation (i.e. excluding mortgage interest rates) from 4.0% to 4.4% – 1.9 percentage points above the old 2.5% target for this measure.