America's official interest rate was raised by a quarter-point last night to 2.75 per cent, the seventh increase since June, when the Federal Reserve began to raise its benchmark federal funds rate from a ultra-low one per cent.
The widely expected decision came with a statement that the interest-setting Federal Open Markets Committee expects to go on raising this rate at a "measured" pace.
This was taken as meaning that more quarter- point increases can be expected until the rate reaches a level regarded as neutral in its impact on inflation - possibly four per cent by the end of this year.
Last night, the Fed expressed some concern about longer-term inflation, but also said that so far energy prices have not yet fed through to mainstream consumer prices.
At home, fears that the Bank of England may be poised to raise its official interest rate next month or in May eased yesterday when National Statistics reported that inflation had stayed unchanged at 1.6 per cent for a third months in February.
Prices as measured by the index used by the Bank for its two per cent inflation target rose by a seasonally adjusted 0.27 per cent between January and February.
But much the same happened last year so year-on-year-inflation was unchanged.
The month's increase, indeed, failed to recover a fall recorded for January in both this consumer price index and the familiar retail prices index still used as a starting point by most wage bargainers and as the basis for both state and private pensions and many welfare benefits.
Pensioners in occupational schemes who receive increase in line with the RPI in December have fared well this year. RPI inflation peaked at 3.5 per cent in December and has fallen back to 3.2 per cent for both January and February. 2.1 per cent.
Not counting mortgage interest, there is a similar pattern, with a December peak of 2.5 per cent easing back to
Last month the biggest price increases came from air fares, highlighted by the CPI formula and from fresh vegetables, which loom larger in the RPI.
Prices for clothes and shoes were also raised more sharply than last year after the January sales.
Gas and electricity charges have now risen by 5.9 per cent over the latest 12 months, faster than at any time since records were kept in the present form in 1997.
In the opposite direction, furniture prices were raised less sharply than in February last year.
Motoring costs were little changed - rising petrol prices were offset by cuts in some motor insurance premiums.
Commenting on the implications for interest rates, Ross Walker an economist at RBS financial markets, said "I think there is still one more quarter-point hike to come, but it's probably August rather than May".
Kate Barker, a member of the Bank's interest-setting committee said on Monday that predictions that inflation would rise above the Bank's target did not automatically entail a rate rise.
But Gerrard's chief economist Simon Rubinsohn highlighted the implications of rocketing oil prices. "The continuing rise in the cost of oil suggests that further petrol price increases are in the pipeline," he said.
Yet the measure for prices of all goods taken together is still 0.2 per cent below February last year, while that for service costs is 3.8 per cent higher.
Meantime, business investment, which fell sharply in the winter of 2003/03, continued its slow recovery in the fourth quarter of last year. This saw an increase of 0.2 per cent to £29.66 billion. Manufacturing accounted for £3.55 billion of the total.
