JamesSmithRF

Chief Economist at the Resolution Foundation. Previous lives at the Bank of England and in the civil service. Focussed on all things economic-policy related.

[JamesSmithRF @JamesSmithRF]

Thanks to @LalithaTry and Cillian Sheehan for help with this thread. Excellent work 👏

[JamesSmithRF @JamesSmithRF]

UK inflation data out this morning show an unexpectedly big FALL in the rate of price increases. You might be forgiven for thinking theres a war on, so why is inflation falling? A LOT going on here, so thread to follow. Key point: this is the last fall for a while so enjoy it...

[JamesSmithRF @JamesSmithRF]

Where inflation goes from here depends on the Middle East (see chart). Whatever happens, tho, this is likely to be the last fall for a while. This chart shows there's potential for big inf rises, and ones that hit lower-income families hard. Big challenges for whoever is PM...

[Sophie Hale @hale_shale]

New Q1 2026 UK trade data out this morning - and the Trump tariff hit on UK exports to the US is now unmissable. Feeding into the longer-term picture of weak goods trade, offset with stronger services trade.

[JamesSmithRF @JamesSmithRF]

Finally, there is a glimmer of good news here. It comes in the emphasis the BoE puts on the looser labour market and tighter financial conditions in suggesting that it doesn't have to be as aggressive with rates this time.

[JamesSmithRF @JamesSmithRF]

Bank of England follows the Fed and holds its policy rate at 3.75% given uncertainty from the conflict in the Middle East. BoE hints it will be patient on raising rates but bigger issue is its assessment of the impact of the war. Thread on all that to follow...

[JamesSmithRF @JamesSmithRF]

So, despite the lack of rise in interest rates today, the BoE is warning that the inflation will be higher, the economy weaker and interest rates may still rise.