Only a natural disaster could prevent interest rates from climbing
Phew! The gloomy sequence of depressing economic data became a touch lighter with the news that inflation was "only" 4% and the trade gap has narrowed sharply.
The good news was only somewhat deflated by a report from the British Retail Consortium that sales were down nearly 2% year-on-year. So a squeeze on living standards, yes, but might the further squeeze from higher interest rates be postponed a few months?
Probably not. The financial markets have indeed taken the view that the rise in rates they had been expecting to come in May might come through a bit later.
There are four powerful reasons to expect that the first rate rise will come after the May meeting of the Bank of England's Monetary Policy committee and really only one significant reason why it might not - four weddings and a funeral, you might say.
Inflation is still way above the target range; it seems set to climb further later in the year; a modest rise in rates would not hit the economy hard if at all; and the balance of evidence is that the economy is growing again. A word about each.
The remit of the Bank of England is to maintain CPI inflation close to 2% in the long-term. It has failed, performing significantly worse than either the US Federal Reserve or the European Central Bank.
It would be nice to think that inflation will come down of its own accord but it is hard to be confident.
A number of reasons for the decline in inflation last month were temporary, such as lower airline fares and cheaper food in supermarkets.
Maybe the oil price will ease off in the coming months, maybe most of the pass-through of that VAT rise has happened, maybe, maybe ... the harsh truth remains that most economists expect worse inflation numbers through the summer, not better.
Would a rise in rates really hit the economy? The conventional headline view is it would, but borrowers seem able to make more noise than savers. Assuming deposit rates reflect increased official rates, something like half the money taken out of the economy comes straight back and it may well be that savers are waiting for higher rates before feeling confident to start spending again.
The fourth "wedding" is that the economy does appear to be growing all right. Support for that comes from the trade figures, which show strong exports of both goods and services.
That leads to the potential funeral: there could be some unexpected bad news in the pipeline, either on the economy or internationally. Shocks, by definition, are unexpected and the world has had more than its fair share in recent months.
If there is some adverse shock between now and May, then the rise in rates may well be postponed, perhaps by three months. But then the subsequent rises might have to be greater.
Shocks, by definition, are unexpected and the world has had its fair share