The prospect of further interest rate cuts this year slipped off the agenda on Wednesday after the Bank of England's governor Mervyn King warned that the Bank will bring inflation back to its two per cent target inside two years - even at the cost of lowering the standard of living.
He discounted fears of an outright recession in Britain, but stopped short of dismissing them altogether.
"Our central projection is for a sharp slowdown of growth and it is quite possible that we may get a quarter or two of negative growth." he warned. "Recession is not the central projection at all, although clearly further shocks could push us in that direction."
The most likely outcome, in the Bank's view is that Britain's economic growth will sink back to about one per cent next winter before recovering to the long-running average of 2.5 per cent in two years' time.
Without any more interest rate cuts the scenario would be only fractionally worse, according to the Bank's latest quarterly Inflation Report.
It contained charts depicting the likely course of inflation, first if interest rates are cut once or twice this year as City markets expected when the report was compiled a few days ago.
That shows inflation still perceptibly above the two per cent target in the spring of 2010 after peaking only just short of four per cent this winter.
A second chart assuming that the Bank's rate stays at the present five per cent shows a peak of about 3.6 per cent and inflation back to the target in late 2009. That is a prospect likely to appeal to several hard-line members of the Bank's rate-setting monetary policy committee (MPC).
Mr King repeated that inflation is likely to remain above the present three per cent for some time and that he will have to write "a number" of quarterly open letters to chancellor Alistair Darling explaining why prices are outstripping the target by more than one per cent.
The MPC Bank's interest-setting monetary policy committee will not seek to drive inflation back to the target during the next 12 months, while the impact of the latest round of gas and electricity price rises are in the 12-month reckoning, Mr King said.
But he then added: "That does not, however, mean it is ignoring the near-term rise in inflation. The extent of the deviation from the target this year is likely to affect the behaviour of those setting prices and wages.
"For that reason, the committee judges that a slowing of demand growth this year, reducing pressure on capacity, will be necessary to ensure that inflation settles around the target in the medium term."
The "nice" decade is behind us, at least for the time being, Mr King concluded.
"The monetary policy committee is facing its most difficult challenge yet...the credit cycle has turned. Commodity prices are rising. We are travelling along a bumpy road as the economy rebalances. Monetary policy cannot, and should not try to, prevent that adjustment."