Inflation is likely to fall rapidly this year as energy prices fall, Bank of England Governor Andrew Bailey has said.
Speaking to Media Wales, Mr Bailey said a recent easing of inflation could be a sign that “a corner has been turned”.
The Bank was not trying to change market expectations that interest rates will peak at 4.5%, he said.
The pandemic and the cost of living crisis meant a UK recession was still on the cards, he added.
Rate hikes
Meanwhile, markets predict interest rates will peak at 4.5%, and the Bank is not steering them away from that, Mr Bailey said.
Interest rates in part determine how much people pay for mortgages and other borrowing.
Last October markets expected UK interest rates to peak as high as 6% – partly reflecting ongoing turmoil triggered by Liz Truss’s brief stint as prime minister.