BoE's Broadbent: Further Evidence Needed To Conclude Downward Trend In Wage Growth
(RTTNews) - Further evidence is required to conclude that wage growth is cooling, and for the Bank of England to consider interest rate cuts, Deputy Governor Ben Broadbent said Monday.
There is a little more uncertainty than usual about the behavior of unemployment, Broadbent said in a speech at the London Business School.
Official wage growth figures have been volatile and other indicators have exhibited slightly lower rates of growth through much of 2023, he noted.
"It takes time to understand the forces driving the economy, particularly if one's having to rely on nominal variables like services inflation and wage growth, things that would normally be seen as late-cycle indicators," the banker said.
Broadbent observed that the Monetary Policy Committee cannot conclude that wages are on a clear downward trend.
Given the volatility in the official estimates, and also the disparity among the various indicators, it will probably need a more protracted and clearer decline in these series before the bank can conclude that things are on a firmly downward trend, Broadbent said.
Last week, the BoE had kept its benchmark rate unchanged at a 15-year high for the third straight session and retained its hawkish bias. The bank rate was retained at 5.25 percent. The MPC said the monetary policy was likely to need to be restrictive for an extended period of time.
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