(Alliance News) - A Bank of England policymaker believes downward forces on wage growth will persist, helping in the fight to contain inflation, Reuters reported on Tuesday.
Swati Dhingra, a member of the BoE's nine-person strong monetary policy committee, said it is difficult to see where "further momentum in wage growth is going to come from".
"We should see some relenting of domestic inflationary pressures," Dhingra told an event hosted by the Royal Economic Society, Reuters reported.
https://www.reuters.com/markets/europe/bank-englands-dhingra-sees-weaker-wage-growth-lower-inflation-2023-10-17/
According to the Office for National Statistics on Tuesday, in the three months to August, annual growth in average total pay, excluding bonuses, cooled to 7.8%. This was in line with market consensus, as cited by FXStreet. The figure for the previous three-month period was revised upwards to 7.9% from 7.8%.
Including bonuses, average pay growth eased to 8.1%, which undershot market expectations of 8.3%. It was 8.5% in the three months to July. The figure including bonuses was affected by the one-off payments made in June through August to NHS and civil service staff, the ONS noted.
The BoE's next interest rate decision is on November 2. Before then, there is an all-important UK consumer price index reading on Wednesday. This is expected to show the UK annual inflation rate eased to 6.5% last month from 6.7% in August, according to FXStreet-cited market consensus. The core inflation is predicted to cool to 6.0% from 6.2%.
At its last meeting, the BoE paused the bank rate at 5.25%, a more than 15-year high, in what was somewhat of a surprise move. Threadneedle Street was largely expected to enact another 25 basis point hike, though a tamer UK inflation reading prior to the decision meant the market had dialled back rate hike bets.
It ended a streak of 14 successive hikes since December 2021, which have shot up the bank rate from a Covid-19-induced low of 0.10%. It was the BoE's first pause since November 2021.
By Eric Cunha, Alliance News news editor
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