It was almost a throwaway remark from Sir Mervyn King. At the end of another uncomfortable press conference, he floated the idea that the 2% inflation target has had its day. In the real world, the target had it quite a while ago, given how long it is since prices were rising that slowly, but to hear the Governor of the Bank of England suggest it is as surprising as to hear the German Chancellor urging Greece to get on and devalue (just you wait).

The series of letters from the Governor explaining why inflation control failed stretches so far as to have lost all capacity to shock. Besides, there is now a sporting chance that the Bank will actually hit the target at some point later this year, a moment which would provide a suitable excuse to abandon it. The A-word wouldn’t be used, of course. Instead, there would be much talk of “broadening the remit” of the MPC to take into account credit conditions, growth and unemployment, rather as the Treasury used to claim it was doing when it dictated Bank Rate to the Bank.

It will all seem frightfully reasonable, all the more so if growth continues to be elusive. Besides, a little more inflation looks like a small price to pay for spreading prosperity. By then, the Bank will have bought in more than a third of Britain’s National Debt, and is likely to be showing a handsome book profit on its investment. However, driving the price up when you’re buying on that scale is easy. Selling the stock back into the market and realising that profit is something else, as Bunker Hunt found out all those years ago when he cornered the silver market.

The nations of the West are currently finding it hard to get inflation going again, but once they succeed, they may find it much harder to stop it. Inflation is a slow-turning engine, and the moment when it’s unfashionable to want protection from it is probably the time to seek some. Now that the UK government has withdrawn index-linked National Savings, and the price of every index-linked gilt guarantees a real-terms loss, there are not many shelters around.

There’s still National Grid’s bond. It has drifted from £104 to £102 as inflation has fallen. It could fall back to, or even below, last October’s £100 issue price should inflation appear to be conquered, but to holders like me, it looks like a very cheap insurance policy against the consequences of running the printing presses too hot.

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