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Broadbent Sees Wage Growth Already Coming Down

BOE
Q: Private sector wage growth +7%, many economists note that needs to be closer to 3%. How are you going to bring that down without a recession?
  • A: Broadbent: Already coming down. We have seen a big increase in cost of living - that has led to firms/workers putting up their nominal income demands. Relatively cautious about unwinding of second round effects.
  • Models show it happens quickly but MPC is more cautious. Unemployment does go up (albeit less than Feb). What drove the increase in the first place? Partly tight labour force, partly other stuff - and that other stuff is now unwinding.

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