Why the interest rate decision has just become interesting

The future of the UK's economy has just been given a little twist by women's clothing, booze and deodorants.

Between them, they helped to push down inflation by more than expected.

At 2.5%, the cost of living has taken a decent-sized step towards the Bank of England's target of 2%. And that raises a few questions.

For one thing, and most pressingly, how should the Bank's monetary policy committee vote at its next meeting?

Is it time to nudge up interest rates by a quarter of one percent, or is it a step too soon? The decision may be closer than we thought.

Up until this morning, it seemed certain that rates would be going up.

We found out yesterday that wage growth had accelerated past inflation , and the rate of unemployment has fallen to its lowest level for decades.

On paper, it looked a no-brainer that the base rate should be nudged up to cool the economy.

But the 2018 version of the British economy is a complex machine and historical comparisons don't always work.

Take a look at the link between wages and employment, for instance - at times of very low unemployment, wages should be going up faster than they are now. So what's holding them back?

The answer is a cocktail of different reasons, so you can take your pick between the decline in the power of trade unions, through to the rise in zero-hours contracts and self-employment, from globalisation to the effect of auto-enrolment pensions.

Then you mix in the still-lingering effects of the financial crisis, and you get a picture of wages failing to take off in the way we might have expected.

So it's complex. But, at its heart, wages are going up - and now by more than inflation. So we are all going to feel a bit richer, right? Well, maybe. That probably depends on where you live, what you do.

But after a year where, in real terms, we all felt poorer, then it will take a bit of time to make up the gap. So the idea of "feeling richer" will only happen gradually.

Consumer confidence has been bruised over the past year, as evidenced by the troubles of so many British retailers.

That confidence will take a while to return and, in an economy that leans heavily upon consumer spending, there is apprehension about doing anything to dent the desire to open a wallet.

Which brings us to interest rates. There are plenty, both inside and outside the Bank, who think that a rate rise is required to calm any nascent economic over-excitement.

But there may now be a growing call to resist a rate rise.

Remember - the Bank's fundamental remit is to get inflation to a 2% target, so if today's data suggests that a fall towards target is already happening, then the more dovish analysts may prefer a policy of "wait and see".

In truth, today's inflation statistics make it a tough call.

After years when the Bank's interest rate decisions were almost entirely predictable (hold, hold, hold…) then our economic grandees will have to debate, cajole and back their instincts.

They'll probably still go for a rise, but it's no longer a certainty.