The Bank of England’s predictions about the rise of interest rates have been wrong, or consistently revised, over at least three years. Some economists believe they should have risen from their base emergency level as soon as the recovery began. I support that view. A small rise would have had no practical effect on the recovery but it would have reactivated interest rates as a tool of economic management. They have been out of use for so long nobody has experience of what the effect will be when they reappear. The notion that it will be just as before may be a rash assumption.
In the modern world of floating currencies and global markets, interest rates have two primary functions. One is to influence currency movement up or down and the other is to reduce inflation by curbing demand. Unfortunately the UK is now in a situation where the currency is too high to allow significant export growth and any rise in interest rates to curb the coming increase in inflation will push sterling higher. It is also not certain by any means that a rise would curb any building inflation. It may actually stoke it because the cost of money suddenly becomes an issue in pricing. So things may not be as settled as they seem. It could be that a lever untouched for many years, when finally pulled, produces an unforeseen outcome. At least for a while.