Is it right to raise interest rates in a recession?

The Bank of England is like the organiser of a bonfire night party. In one hand it has the jerry can full of petrol to fling over the pile of wet logs, in the other there's a fire extinguisher ready to put it out almost at the same time.

Today's rate rise is designed to dampen down the economy and stamp out entrenched inflation. But the other announcement, that future rises will be limited, and peak interest rates should not rise above 5%, shows just how worried the Bank is about the overall impact on the economy, and especially the mortgage market.

The UK is facing the start of a "very challenging" two-year recession, according to the Bank, the longest recession ever recorded in official statistics, and yet interest rates will carry on going up, after eight rises, including today's jumbo rise of to 3%.

As if in recognition of this difficult to explain stance, the Bank has done something it doesn't normally do in the published minutes of its decisions. In order to reassure the markets and the public that rises won't just keep going up at this kind of rate, potentially killing off any sparks of growth, future rises are expected to "peak lower than priced into financial markets".

Governor Bailey told me that the net effect of today's announcements could be that fixed mortgage rates don't reach the 6%-plus level that seemed likely in the aftermath of the mini-budget. Although variable rate mortgages will go up automatically as a result of today's interest rate rise, fixed mortgage rates are influenced more by assumptions about where rates will go over two or five years. Mr Bailey is managing those expectations down, even as he actually raises current rates. It is a tricky manoeuvre.

This is a different approach to that taken by, for example, the USA. The rhetoric and actions of the Federal Reserve have been unrelenting in attacking inflation, in saying that they have a bias towards raising rates higher, even than necessary, because moves can always be rowed back.

But the US is in a different situation. The Bank of England's approach reflects the fact that the UK balancing act is much more delicate. The forecast two-year recession would mean zero growth over the entire post-pandemic period, and indeed over the five-year parliament, following the 2019 election.

The pandemic, its aftermath, the war in Ukraine, and the energy shock, are the fuel for all of this of course. But with the Bank and the government pointing to more pain and sacrifice for millions of households, who are already facing multi-thousand pound increases in mortgage, energy and tax bills, people would be forgiven for asking: have decisions made here in Britain served to fan the flames?