If the Bank of England had cut interest rates yesterday it would have delivered a jolting shock to the City's army of traders currency futures, interest rate swaps and arcane derivatives nobody dares admit that they don't understand.

It could have been taken as something dangerously close to panic. "What," these dealers would have asked, "does the Bank know that we don't know?"

It is a question best un-asked. In twitchy times, the great thing is to do to make things worse.

In real life, the City was so certain that the Bank would do nothing that it couldn't very well do anything. Maybe it had done its bit by letting talk of six per cent this autumn slip off the agenda.

Having accepted that nothing was their only option, the Bank's committee members must have agonised over the wording of their uncharacteristic statement explaining, for the umpteenth time, that it is not their job to save the world, or even the world's money markets - only to set interest rates so as to keep in sight of the Government's two per cent inflation target.

Still, only twice before have they felt it was worth explaining why they had done nothing. The last time was in 1999.

Yet the case for cutting interest rates that looked non-existent a month ago has become overwhelming - if only it can be done without risking a panic.

Inflation as measured by the Treasury's chosen consumer prices index, suddenly fell below the two per cent target in July.

In June it stood 0.4 per cent above it - and the downward lurch of 0.5 per cent between the two months arose from a bucketful of factors, not some statistical freak.

The Bank acknowledges that this version of inflation "may remain around, or a little below, the two per cent target for a next few months".

True, it is supposed to shoot at the target 18 months or two years out. Something nasty can happen along the way.

The price of grain has taken off round the world. Perhaps we can no longer look for ever-cheaper Chinese goods to offset the rising cost of services we provide for ourselves, now that the Chinese are expected to take more care about the way they paint their toys.

Unemployment is falling in Poland. Perhaps those industrious plumbers will go back home - they already expect to be paid more than they used to be. Perhaps British shops and restaurants will decide to hire English-speaking staff again.

All sorts of perhapses could set inflation off again. If they do, the Bank can respond with higher interest rates.

There is one certainty. Some 250,000 home-buyers with two-year fixed rate mortgages expiring this autumn face extra payments of at least £100 a month for each £100,000 they have borrowed - unless interest rates come down.

The exact amount depends on the rate banks charge each other in the market. But the Bank of England can ease the pressure if it wishes. The trick is to do it without panicking anyone.