MERVYN KING, governor of the Bank of England, has long cherished the ambition of making British monetary policy boring. Instead it has become rather exciting thanks to the announcement of an unexpected jump in inflation. Scenting a rise in interest rates when the bank's monetary-policy committee (MPC) next meets in early May, foreign-exchange dealers responded by pushing sterling just above $2 on Tuesday April 17th, the first time it has reached this iconic level since September 1992.

The consensus forecast in the markets was that consumer-price inflation would stay steady in the year to March at 2.8%, the same as in February. Instead it rose to 3.1%, the highest since August 1992. That number may not sound iconic but it matters a lot under the current arrangement for monetary policy.

The framework was set by Gordon Brown, the chancellor of the exchequer (Britain's finance minister), almost immediately after Labour won power in May 1997. Mr Brown granted the bank operational independence to set interest rates and gave it the task of ensuring that inflation stayed at the government's target, which is currently 2% a year for consumer prices. If inflation strayed by more than a percentage point in either direction, the bank's governor would have to write an open letter to the chancellor explaining why this had happened and what the MPC proposed to do about it.

When the arrangement was established, the chances of such a public letter seemed high given the past volatility of inflation. Calculations in 1998 by Charles Bean of the London School of Economics, who subsequently became the bank's chief economist, suggested that inflation was likely to be more than a percentage point away from the target around 40% of the time. Now, for the first time in the past ten years—ironically on the eve of the tenth anniversary of the bank's independence—a governor has had to put pen to paper.

Mr King's letter may have been a first but it contained little to add to the stress levels of City analysts, already caught out by guessing the inflation figure wrong. In a crucial sentence, the governor said that the news seemed “unlikely to alter the broad picture painted in the February [Inflation] Report”, when it last published its quarterly economic outlook.

That suggests two things. First, the bank dropped the broadest of hints in that report that it would raise interest rates by a further quarter-point before too long. One of its projections showed that if the base rate were held at 5.25%, inflation would exceed the 2% target in two years' time, the period that it takes for monetary policy to have its maximum effect on prices. A rate rise to 5.5% now looks a near certainty when the MPC meets on May 10th.

Second, the bank remains pretty confident that inflation is lapping close to its high-water mark and will soon recede fast to around 2%. Mr King reminded the chancellor in his letter that the central outlook in the February report was for “inflation to fall a little below the target by the end of this year, before settling at around the target during the following year”. The main reason for this confidence is that gas and electricity prices, which climbed exceptionally fast in 2006, are expected to fall sharply this year.

Still, the bank remains rightly concerned about underlying inflationary pressures. Monetary growth has been rapid and there has been a resurgence in house-price inflation. And, although recent pay deals have been surprisingly subdued, there are worrying signs that businesses now feel they can push through price increases. The bank is likely to remain quite hawkish until it is sure that inflationary expectations have been bolted back to the 2% target. Interest rates have already risen from 4.5% last summer to 5.25%. Britain's inflation surprise increases the likelihood that they could rise to as high as 5.75% later this year.