Given her disastrous six weeks in office, the revelation that Liz Truss considered sacking Andrew Bailey during her brief tenure as Prime Minister is hardly a scathing indictment of the leadership team at the Bank of England. Against the backdrop of economic chaos triggered by Ms Truss and her equally fleeting Chancellor Kwasi Kwarteng, singling out Governor Bailey is akin to Ahab giving Ishmael a ticking off for failing to adjust tack during the doomed pursuit of the great white whale.

That, however, is not an exoneration of the Bank’s underwhelming track record which was laid bare last week by former US Federal Reserve Chairman Ben Bernanke. The brutal verdict of his review, which puts forward 12 detailed recommendations for improvement, has reignited the debate over the extent to which the BoE’s failings have exacerbated the cost-of-living crisis.

READ MORE: What is the Bernanke review and what did it find?

From the miscall in May 2021 that price pressures would be “transitory” and then underestimating how high they would rise, to then overestimating the scale of inflation in August 2022, the Old Lady of Threadneedle Street has been losing her faculties. These miscalculations have been accompanied by dramatic errors on pay growth and economic output, with the economy slipping into a technical recession at the end of last year as consumers and businesses clamped down on spending in the face of higher interest rates.

Latest figures showing that the UK economy grew slightly in February have raised hopes that it is now on its way out of recession, but the pace of recovery will be a slow-growth treadmill.

The initial estimate released on Friday by the Office for National Statistics (ONS) showed growth of 0.1% between January and February, a dip compared to January’s upwardly revised growth figure of 0.3% but still in positive territory. Looking across the three months to February as a whole, the economy grew for the first time since last summer.

The recession may have been short and shallow, but the slog back into anaemic growth won’t feel like cause for celebration. A cut in interest rates would be a boost to fragile economic activity, but having been caught out previously the BoE will likely maintain its resolve to keep the benchmark rate at 5.25% until convinced the data indicates there will be no resurgence in inflation.

Figures due to be released today by the ONS are expected to show a further softening in the UK jobs market which has been chronically constrained by labour shortages in the wake of Brexit and the pandemic. If economic pundits are correct, tomorrow’s inflation estimate for March will show a further decline from the current reading of 3.8% while Friday’s retail sales figures covering the same period will reflect a less-than-stellar performance.

READ MORE: Wage growth cools further but still outstripping inflation

All of this should persuade members of the Bank’s Monetary Policy Committee (MPC) of the need to start easing rates in the coming few months, but there is another set of figures that could upset the applecart.

Mr Bailey & Co have for some time expressed concern about the impact of higher wages on inflation, with the Governor drawing criticism for telling workers not to ask for big pay increases despite the cost-of-living crisis. Similarly, BoE chief economist Huw Pill said last year that families must “accept that they’re worse off” and exercise restraint to help control inflation.

Today’s unemployment figures from the ONS will be accompanied by wage data for the three months to February which is expected to show that while pay growth is slowing, it is still rising at a faster pace than inflation.

Inflation is easing in large part thanks to the base effect of comparisons to a year ago when prices were rising at eye-watering levels. The Office for Budget Responsibility is currently forecasting an average rate of 2.2% for 2024 as a whole, which will accentuate the gap between inflation and wage growth.

Furthermore, the impact of the 9.8% increase in the living wage at the beginning of this month – and the knock-on effects for earnings further up the chain – have yet to feed through into the official figures. The MPC will be acutely aware of this.

READ MORE: One in three Scots going into debt to pay for food and essential living costs

But with headline inflation falling, critics have warned that the BoE is making another mistake by refusing to cut rates. In the wake of the Bernanke review, Julian Jessop of the Institute of Economic Affairs said the report had exposed “serious shortcomings” at the Bank which “ultimately deepened the cost-of-living crisis” that has driven workers to push for higher pay.

While the Conservatives have attempted to claim credit for falling inflation the fact remains that prices are still rising at a faster pace than the Bank of England’s 2% target. More significantly, this is coming on top of the huge surges of the past two years that are now baked into the cost of living, never to be regained without a meaningful uplift in salaries and wages.

A survey out yesterday from business management consultancy People Insight suggests that despite “record salaries” more than half of UK workers are unhappy with their pay. The number of those saying they are satisfied tumbled to 44% from 52% a year earlier.

While those on hefty six-figure salaries such as Mr Bailey and Mr Pill may be inconvenienced by the higher cost of energy, food, and so forth, there are many who have little if any belt left to tighten. An estimated 34% of Scottish households are now suffering from fuel poverty, while other figures suggest that more than a third of Scottish adults were forced to rely on unsecured debt to pay essential living costs last year.

At last week’s press conference to launch his report, Mr Bernanke is said to have discreetly avoided answering the question of whether the MPC could have made fewer mistakes had his recommendations already been in place. But with so many others paying dearly for the BoE’s errors, it clearly must do better.