The Governor of the Bank of England was in upbeat mood when he addressed an audience of business people, including a number of Chamber and Initiative members, during a visit to Bristol.

Speaking at the event, hosted by Triodos Bank, Andrew Bailey stressed how grateful he was for the input from business which helped shape national policy.

He explained there were good reasons to be optimistic and expected the rate of inflation to reach the 2% target by May or June, largely helped by falling energy prices. Gas prices were falling and oil prices had not risen much, despite conflict in the middle east. Food prices were coming down but the costs of services, which had a high labour element, were falling more slowly and were still around 6%

The Governor said he thought the next rate movement would be down, though he was not certain when that would come and he cautioned it was likely that inflation would increase again later in the year to something like 2.75%.

I took the opportunity to ask a question about housing supply and affordability, which is of great concern to members in Bath and North East Somerset. Mr Bailey replied to say that whilst they were not responsible for this sector, they did consider house prices as part of their discussion on inflation. He noted the rise in rates had not brought the market down and re-possessions had not increased.

Continuing on that theme, Simon Prescott, Non-Exec Director at Business West, asked whether he thought there should be an independent body set up to determine the extent of house building. The Governor said he thought independent bodies, such as the Bank of England, worked well on broad issues such as interest rates, but he suspected it would be difficult for an Independent body to act house building which was something which had a direct impact on individuals.

Looking to the future, he said the bank would need to contend with global shocks, such as they had with Covid and the war in Ukraine, with climate change and greater use of AI, but also to deal with domestic issues. He was currently concerned about the rise in the number of economically inactive people and our ageing population, which probably meant there was a need for people, when they can, to work longer.