Bank of england loses market confidence.

Investors Chronicle, August, 2006

Markets are losing confidence in the Bank of England. The break-even inflation rate - the gap between conventional and index-linked gilt yields - has risen to a 6 year high. For 10-year maturities, it's now 3.4 percentage points.

This suggests investors fear inflation might consistently overshoot its target, which implies they believe official interest rates are too low. This will add to the pressure on the monetary policy committee to raise rates again.