MNI BRIEF: BOE Pill Says Wage Growth Easing Key For Policy

The key policy question for the Bank of England was whether to react to early signs of easing labour market pressures, including the flatlining broader economy and softer private sector pay survey data, or whether to wait for official data to show earnings growth declining, Chief Economist Huw Pill said Monday.

Speaking at an OMFIF event, Pill tilted against early easing saying that the upside inflation shock from high energy prices had fed through to more enduring price pressures and "If we have persistentcomponentsofinflationitseemsnaturalthatwe'dhaveapersistentresponse".

High official earnings data appeared to be an outlier with early indicators of pay pressures, such as the unemployment-to-vacancies ratio, pointing to a softer labour market and Pill said the question was whether to wait until they saw "the whites of the eyes" of easing earnings growth. He expanded on his Table Mountain image of the policy rate staying high, but stable, for long saying the top of the mountain was shrouded in cloud - suggesting the price peak remains uncertain.