The day after Kwasi Kwarteng was named chancellor, he tweeted a picture of himself with Andrew Bailey, the Bank of England’s governor. It was significant. After a leadership campaign in which Liz Truss lambasted Bailey for allowing inflation to rise to five times above his 2 per cent target, it was time to be conciliatory. The pair looked jovial as Kwarteng declared that Bailey’s independence in setting interest rates was “sacrosanct”.
But the new chancellor made another important statement: he and the governor would “co-ordinate” the response to the cost of living crisis that is threatening the livelihoods of millions and risks driving the economy into recession. This week will provide the first glimpse of what that means in practice.
On Thursday, the Bank will