When the BoE slips up, we all pay the price. That's why it needs to think very carefully before making a knee-jerk reaction to the shock March inflation figure of 10.1 percent.

The big policy error I'm talking about is governor Andrew Bailey's slug-like response to clear signs that an inflationary storm was brewing two years ago.

Early in 2021, it was becoming clear that years of near-zero interest rates and endless fiscal and monetary stimulus were about to unleash a financial hurricane.

Yet Bailey stood blinking at the horizon, and said he couldn't see anything. Then he could see something that looked a bit like inflation, but it was only "transitory".

Nothing to worry about.

To be fair, Bailey wasn't the only one to dismiss the return of inflation as a passing phenomenon.

Almost every other major central banker did, too, led by Jay Powell, chair of the mighty US Federal Reserve.

Bailey was just succumbing to group think, which is a failure in itself.

I've previously called the BoE the Michael Fish of forecasters. Fish famously claimed the UK would avoid a devastating hurricane that went on to wreck large parts of southern England in 1987.

Bailey missed the inflationary hurricane, which went on to wreck large parts of the UK economy and millions of people's lives as living costs soared.

Early action could have burst the inflation bubble months ago, but the Bank acted too late.

Now the BoE looks set to overcompensate by hiking rates when there's no longer any point in doing so.

It's doing this purely to cover its back.

Now almost every analyst assumes it will lift base rates to 4.5 percent at its next meeting on May 11. Rates could even hit five percent later this year.

This will pile yet more pressure onto cash-strapped homeowners with variable rate mortgages.

It will be a massive shock for those whose dirt-cheap fixed-rates mature this year, as they now face mortgage rates of four or five percent.

It will also make life harder for cash-strapped businesses, whose borrowing costs will rise.

Higher interest rates will add to the cost-of-living crisis, but I’m just not sure what the benefits are.

It will do nothing to drive down food prices, which rose at an alarming 19.2 percent in the year to March.

Global food prices are actually falling, and there is a growing suspicion that supermarkets are taking the opportunity to boost their margins by failing to pass on savings to shoppers.

Hiking bank rate won’t change that.

Nor will it do anything to ease the UK’s longstanding housing shortage, which is adding fuel to the inflationary fire by driving up rents.

Housing and housing services, which included both mortgages and rents, rocketed 26.1 percent over the last year.

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Hiking domestic interest rates will do nothing to solve the energy crisis, which has been driven by soaring wholesale gas prices due to war in Ukraine.

The BoE is behind the curve yet again, and is in danger of overreacting to the March figure.

Monetary policy has a long time lag. Interest rate changes take anything between six months and two years to feed through to the economy.

Bailey and more hawkish members of the MPC should know that, but I’m not convinced they do.

If they had, they would have started to hike rates in the summer of 2021, when the inflationary hurricane was still at an early stage.

Now they should hold off as the storm shows signs of passing.

Wholesale gas prices have almost halved and this will start feeding through to household bills from May.

Consumer price growth is down to six percent in the US. The pound's recent recovery may also cut import costs.

Bailey and the BoE should hold fire.

Hiking rates again won't do much good, but it could do an awful lot of harm.