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.
Financial markets had predicted a bigger drop in the annual rate to 3.1% and saw the latest data on price pressures as putting back the timing of interest rate cuts.
Bailey said: "We are pretty much on track with where we thought we would be a bit under in February and a bit over in the latest figures. Next month will see quite a strong drop." While the UK was experiencing strong disinflation - a drop in the inflation rate - the governor said the fall was unbalanced. He said that April is likely to see household energy bills 25% lower than a year earlier, but service sector inflation is running at 6%. Decisions on interest rates would be influenced by service sector inflation, earnings growth and the state of the labour market, he said.
This story is from the April 18, 2024 edition of The Guardian.
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This story is from the April 18, 2024 edition of The Guardian.
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