Steph McGovern

And those second round effects could be firms passing on costs to consumers, then them having less money, and then that could mean demand for things falls, and then people might let go of employees, so unemployment could rise, but then that could...

mean inflation isn't hit as hard because then obviously if people demand is lower, then prices can come down.

But equally, you might get people asking for higher pay.

But that, again, is not as dramatic as the third scenario.

So that's the one that the Bank of England thinks is most likely.

And we'll talk about after I've told you about the other scenario, what that means for interest rates and things in a minute.

The worst case scenario, C, is that oil stays high for a sustained period, gas prices, for example, double, the wage price spirals, and the end result will be inflation rising to 6.2% in 2027.

And interest rates having to go up because of that.

And we'll talk about that in a minute.

But basically, it's

This is all dependent on how long oil stays high for and what that means for energy prices and therefore the impact on everyone else.

Because people, the longer this goes on for, then the more likely people will change behaviours because of it.

And that is what the Bank of England are trying to work out is what happens.

But what, Robert, I'd love to know what you think on this.

This then impacts, doesn't it?

This is what they do when they sit in this meeting, this monetary policy committee, then sit in the meeting with all this data and try and work out what does that mean for interest rates?

And we know from the last meeting that they've been held for now at 3.75%.

There was one of them, Hugh Pill, who voted for it to go up.

to 4%, but he was outnumbered by the others.

But there is a chance that in these second and third scenarios, interest rates would have to go.