Slack salary growth unlikely to stir Bank of England into action on interest rates

“A deceleration in wage growth to 1.8% suggest the Bank of England will feel no pressure to raise interest rates any time soon", says Russ Mould, AJ Bell Investment Director.

“The Office of National Statistics today revealed that UK unemployment rose by 11,000 in the three months to February, compared to the prior three-month period.  This helped restrain wage growth to 1.8% for the December to February period, compared to 2.1% for November to January.

“Whether this is a blip ahead of the EU referendum on 23 June or a sign of a more profound slowdown in the UK economy remains to be seen, but the easing in wage growth could take a little steam out of the very modest increases we have seen in UK inflation this year.

“That in turn suggest the Bank of England is unlikely to rush to raise interest rates any time soon, even if the headline borrowing rate has been anchored at a record-low of 0.5% since March 2009.” 

Source: ONS
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