The Bank of England's shock move on interest rates yesterday (11.1.07) caught pretty much everyone by surprise. Rates just never go up in January. Well, at least they never have since 1997.

Rate rises had been a fairly easy call for city analysts for the last couple of years, and so their expectations have been listened to, the media has followed up with the same views and everyone knew where they were and felt fairly confident they knew what was coming.

That, we think, is the point of the January rise. It came out of the blue specifically to give everyone a jolt and confound expectations and, most importantly, to send the message that future rises are quite possible.

So the message is? The BoE does not want higher inflation spilling into New Year pay deals and therefore getting locked into the system.

The rise probably means that December's consumer inflation rate was higher than expected, certainly higher than the 2.7 per cent level in November, and perhaps it even breached the 3 per cent barrier. If so - and the BoE has already seen the numbers - it really had no choice but to act now.