Expecting the smart economic minds on the Bank of England’s interest rate-setting panel to forecast the out-turn of events in the Middle East is preposterous.

Erratic and mercurial leadership in the White House has meant the world is in permanent uncertainty since the war on Iran broke out in February.

The direst forecasts of mayhem from the International Monetary Fund, the Bank and elsewhere have proved wrong, and the conflict is not a repeat of the inflation seen after Russia invaded Ukraine in 2022.

Energy storage in the US and Europe, an easing of Russian sanctions and pipelines which circumvent the Strait of Hormuz all mean that the feared shock to inflation and growth has been muted.

Even so, with energy inventories running short, cooler weather to come and €2billion of lost farm output in a sizzling Europe alone, there should be no complacency. The Bank minutes illustrate the dilemma.

Consumer price inflation has been well above its 2 per cent target since midway through 2024 – even longer in the US.

The secondary impact of higher energy costs on everything from steel to food is the main complaint from businesses and consumers. 

Working against this trend is a looser labour market, which is unlikely to tighten anytime soon given the impact of AI on job creation.

Andy Burnham’s Government will need to show a greater willingness to stand up to public sector pay demands than Keir Starmer and Rachel Reeves.

Comments from Bank Governor Andrew Bailey and the voting pattern on the Monetary Policy Committee (MPC) show which way the wind is blowing.

There are three interest rate-setters demanding action to raise rates, having had enough of wait-and-see.

The current MPC procrastination, and that of the US Federal Reserve, unwittingly adds another layer of uncertainty to those managing businesses, taking out car loans or seeking a mortgage.

As much as one would like to see lower rates, to bolster the optimism generated by a change of Labour leadership, certainty ought to be the order of the day.

Wait-and-see postpones the evil day. Interest rates may not be much use in combating oil prices, but the warnings of the Bank’s chief economist Huw Pill of upside price dangers are not to be ignored.

Away from the guessing game about interest rates, some of Britain’s biggest enterprises are in rude health, justifying the rise to a new FTSE 100 record this week.

The UK is short of tech stars. Arm Holdings escaped long ago, and data centre champion Segro is on the way out.

London’s strength in defensive stocks such as oil, banking and defence is having a moment.

Shell is a major beneficiary of volatility, with its preferred profits measure doubling in the second quarter.

The volatility in oil and gas markets fuelled the gains.

The focus of chief executive Wael Sawan on ditching projects – some of them green – which don’t pay their way, is helping. 

Elsewhere, Lloyds Bank is aware its biggest competitors are not the other clearing banks, but tech newcomers such as Revolut, Apple Pay and Monzo.

Chief executive Charlie Nunn unveiled a £13billion four-year plan, which includes a big spend on AI, beefing up corporate banking and creating a smart wallet.

But it is much harder for legacy banks with a huge mortgage book and patched-up IT systems to compete in the digital and cyber space.

Rolls-Royce is among the most exciting blue-chips. Chief executive Tufan Erginbilgic presides over a remarkable recovery story in UK business, with an upgrade in operating profit expectations to as much as £4.9billion in 2026.

The group is a big beneficiary of higher defence spending and its pioneering work in autonomous propulsion and drone systems.

It is Europe’s biggest player in small modular nuclear reactors, and is pressing the Government to get behind its effort to produce aero engines in the growing narrow-body jet market.

Investors have been rewarded with a 1,450 per cent rise in the share price since the nadir of Covid. Who would have thought?