Hopes that last week's interest rate cut is set to be the first of a fast-moving series faded yesterday when the Bank of England published a distinctly cautious assessment of prospects for inflation in its quarterly Inflation Report.
The Bank's governor, Mervyn King, also said the British economy is likely to grow by two per cent this year, against three to 3.5 per cent forecast by Chancellor Gordon Brown in his March Budget.
He drew on a cricketing analogy to illustrate his ambivalent attitude to future interest rate cuts.
"Last Thursday night some market commentators were confident that interest rates would fall much further," Mr King recalled.
"Last Thursday night some sports commentators were also confident that England would beat Australia after Flintoff and his team-mates had smashed their way through to such a large total on the first day of the second Ashes Test.
"But as we saw at Edgbaston on Sunday, nothing is that certain. So, as ever (the Bank's interest-setting monetary policy committee) will play each ball on its merits and not decide in advance where interest rates will go next."
The report contained two charts showing the likely course of inflation over the next two years.
One, based on the money markets' expectation that there will be three quarter point cuts in the Bank's official interest rate.
That shows inflation most probably rising sharply this autumn from the present two per cent. It would then sink back next year below the two per cent target, but then pick, up again. By the end of the Bank's two-year timescale it would be above the target again - and rising.
The second chart, based on an interest rate of 4.5 per cent throughout, shows a similar, but more restrained pattern finishing, as Mr King pointed out "pretty well on target" in mid-2007.
His personal preference was plain - leave well alone unless circumstances change.
A similar chart projecting the most likely pattern for economic growth shows a steady recovery steadily over the next two years to about three per cent, then starting to tail off. But that assumes that the market's expectation of more interest rate cuts turns out to be right.
The price of oil is they key to the Bank's projections for inflation. It expects its recent jump to close on $64 a barrel to quicken the rate of price increases this autumn.
But next year inflation should slow down again as oil price rises in the first half of 2005 drop out of the year-onon year calculation - assuming that the price now levels off at, or slightly below, the present level, as the markets expect.
Mr King stressed that we are not seeing a replay of the oil shocks of the 1970s.
"This time it reflects an increase in demand. We are going into it with buoyant world demand."
The big mistake by the authorities on those previous occasions was that they let inflationary expectations become" detached from anything that could be called stability", he added
That was not happening now, although inflation could well rise above trend.
The report notes "As there is an explicit target for inflation, the public are likely to expect deviations of inflation from that target to be temporary. And that will help anchor inflation expectations, stabilising actual inflation".
The report, prepared for use at last week's rate-setting meeting, said business surveys and assessments by the Bank's regional agents suggested economic growth slowed less markedly after early 2004 than was implied in recent statistical revisions.