Bank of England governor shrugs off smaller-than-expected fall in inflation

Speaking in Washington after news that the government’s preferred measure of the cost of living had eased to 3.2% in March, Bailey said the path of inflation was broadly in line with what Threadneedle Street had predicted in its quarterly health check on the economy.

Bailey’s comments followed the release of data showing the annual inflation rate at its lowest level since September 2021 – helped by food prices rising more slowly than a year earlier.

Speaking in Washington on Wednesday night, the chancellor said the economy had achieved a “soft landing” and been transformed since Rishi Sunak became prime minister.

Hunt said that when he arrived at the Treasury in late 2022, the Bank of England was predicting the longest recession in 100 years and the Office for Budget Responsibility was expecting a record drop in living standards.

Investors reacted to the March figure by trimming bets for an imminent reduction in borrowing costs, pricing in the first quarter-point rate cut in September or November.

The latest snapshot showed consumer prices continuing to rise across a broad range of categories, including car insurance, which soared by almost 30% compared with a year earlier.