In a recent report, Chris Hare, Senior Economist at HSBC Bank, has stated that the inflation data released by the UK today, wage data disclosed on Tuesday, and last week’s GDP figures all serve as hawkish signals for the policy makers at the Bank of England.
Given the persistent wage pressures, there is still a long way to go in bringing down the inflation rate to the Bank of England’s target of 2%.
Hare has pointed out that despite signs of softening in the UK labor market, it might take a considerable amount of time to significantly lower the pace of wage growth.
Consequently, Hare has indicated that while their primary view is that the Bank of England will only raise interest rates once more in September and then pause rate hikes for an extended period, the risks posed by wage pressures and inflation data could prompt the Bank of England to opt for further tightening of monetary policy.
