Ruth Gregory, Deputy Chief UK Economist at Capital Economics, stated in a report that the accelerated wage growth in the UK supports the view that the Bank of England will raise interest rates again in September.
According to Gregory, the decrease of 66,000 in employment during the three months leading to June indicates that the tight labor market is easing, which should be welcomed by policymakers at the Bank of England. However, the cooling employment numbers haven’t led to a slowdown in wage growth. The income growth rate surged from 0.5% in May to 1.1% in June.
Nevertheless, whether the Bank of England will raise the benchmark interest rate from 5.25% to 5.5% will still depend on the release of the next labor market data and two sets of inflation data.
