This morning has brought the policies of the Bank of England into focus as this from the BBC demonstrates.

Petrol prices rose by 6p a litre in May – the biggest monthly increase since the RAC began tracking prices 18 years ago.

Average petrol prices hit 129.4p a litre, while average diesel prices also rose by 6p to 132.3p a litre.

The RAC said a “punitive combination” of higher crude oil prices and a weaker pound was to blame for the increases.

It pointed out that oil prices broke through the $80-a-barrel mark twice in May – a three-and-a-half year high.

As well as the higher global market price of crude, the pound’s current weakness against the US dollar also makes petrol more expensive as oil is traded in dollars.

There is little or nothing that could have been done about the rising price of crude oil but there is something that could have been done about the “pound’s current weakness against the US dollar”. In fact it is worse than that if we look back to April 20th.

The governor of the Bank of England has said that an interest rate rise is “likely” this year, but any increases will be gradual.

This was quite an unreliable boyfriend style reversal on the previous forward guidance towards a Bank Rate rise in May that the Financial Times thought was something of a triumph. But the crucial point here is that the UK Pound £ was US $1.42 the day before Mark Carney spoke as opposed to US $1.33. Some of that is the result of what we call the King Dollar but Governor Carney gave things a shove. After all we used to move with the US Dollar much more than we have partly because our monetary policy was more aligned with its. Or to be precise only cuts in interest-rates seem likely to be aligned with the US under the stewardship of Governor Carney.

Just as a reminder UK inflation remains above target where it has been for a while.

The Consumer Prices Index (CPI) 12-month rate was 2.4% in April 2018, down from 2.5% in March 2018.

The welcome fall in inflation due to the rally in the UK Pound £ has been torpedoed by the unreliable boyfriend and a specific example of this is shown below.