14 June 2023 - Wage pressure expected to continue
The Bank of England appears certain to hike rates when the MPC meets next week. Andrew Bailey, the Bank’s Governor virtually confirmed the need for still higher rates during his testimony to the House of Lords. He confirmed his view that inflation will eventually fall back close to the Government’s target of 2%, despite it taking significantly longer than anyone at the Central Bank had first imagined. Bailey has received criticism from MPs in the past for being too timid in dealing with rising inflation. While other G7 Central Banks have increased the size of the increments of their own tightening of monetary policy, the MPC has “plodded along” hiking by twenty-five basis points at each of its last twelve meetings dating back to December 2021. Yesterday he quoted data that had just been released showing that private sector wage growth continues to show an extremely tight labour market. In the three months to April, wages in the private sector rose by 7.6%. He was asked if the Bank of England could have done more in the early days of the current cycle to prevent the current situation. Beyond Currency Market Commentary: Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.