The central bankers are running scared, and they jolly well should be. The thing that is frightening them is the resurgence of inflation, for they know that if it does not subside soon not only will they have to tighten policy; they will be blamed for not tightening earlier. Until the last week they could claim that the combination of quantitative easing (QE) and ultra-low interest rates had not only supported the world economy through the downturn but also helped engineer a rapid recovery. The costs had been modest compared with the benefits. There had been quite a bit of asset inflation, including in house prices just about everywhere, but until recently not much current inflation. So they could keep the money taps open.