The governor of the Bank of England has warned inflation could top 5% because of rising inflation expectations and higher commodity prices.
The pound reached a 14-month high today while gilts fell, after data revealed UK inflation soared to 4.4% in February.
Members of the Bank of England court revealed yesterday they are "uncomfortable" with governor Mervyn King's involvement in politics.
Expectations the Bank of England and European Central Bank will raise interest rates in the second quarter of 2011 have risen dramatically, a new survey of fund managers shows.
Bank of England deputy governor Charlie Bean has defended MPC policy in the face of persistently high inflation, warning the economy could be on the verge of a "durable slowing".
Bank of England governor Mervyn King has not ruled out another round of quantitative easing and has reiterated his belief the UK recovery will be choppy.
The oil price could surge to $220 a barrel and thwart the global economic recovery, according to Nomura.
M&G's bond vigilante Matthew Russell explains why inflation expectations should not influence the increasingly hawkish MPC on rate rises.