The slowdown will be harsh enough to do the trick

GRIPPED by inflationary fears, financial markets have spun around full circle in recent weeks. In early May they were expecting the Bank of England to cut interest rates again later this year in order to avert too sharp a slowdown. By mid-June they were expecting the central bank to push up rates to curb price pressures.

On June 17th official figures revealed that inflation in the year to May was even higher than the City had predicted. Consumer prices rose by 3.3%, compared with the consensus forecast of 3.2% and up from 3.0% in April. Yet by the end of the day interest-rate expectations had eased. ...