"Maybe it is that it is more of an inflationary threat."

In the global credit markets, for example, bondholders push yields up rapidly when they perceive an inflationary threat.

"Earlier this year, the Fed overemphasized the inflationary threat, and that has led to unrealistic fears among long-term bond investors."

After all, why turn off the boom to fight an inflationary threat that may never materialize?

So now we have a pre-emptive strike - a rise in rates to forestall an inflationary threat that all agree has not appeared.

This meant no immediate inflationary threat, which would normally push bond prices lower.

The inflationary threat in higher energy prices was heightened as crude oil climbed for a third day.

"As a result, there is little evidence of a general inflationary threat," it said.

Other inflationary threats are also in retreat.

Employee compensation costs rose slightly this spring because of an increase in benefits, but the gain posed no inflationary threat, Government figures showed today.