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MNI BRIEF: Inflation Is Key Wage Growth Driver - BOE Pill

(MNI) London

Inflation, not the tightness of the labour market, was the main force behind elevated wage growth, Bank of England Chief Economist Huw Pill told lawmakers Tuesday, adding that the labour market would ease as the recession continued.

Giving evidence to the Lords Economic Affairs Committee Pill said that inflation was "the more important driver of wage growth," with wage growth of over 6% in private sector earnings incompatible with the Monetary Policy Committee's 2% inflation target.

Pill said that he expected high vacancy rates, distorted in part by the Covid shock, would decline going forward and that unemployment rates would rise, with the weakness in demand reflected in a reduction in working hours and unemployment hitting 6%. Nevertheless, he argued that further rate hikes were needed Asked by former BOE Governor Meryn King if Bank Rate was insufficiently high, Pill said that "I have sympathy with you that 3% is not enough."

MNI London Bureau | +44 203-586-2223 | david.robinson@marketnews.com
Bank of EnglandPolicy NewsCentral Bank NewsBriefCEEMEABank Of England (BOE) Market NewsPolicy StoryUKStoryRegion
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MNI London Bureau | +44 203-586-2223 | david.robinson@marketnews.com
Bank of EnglandPolicy NewsCentral Bank NewsBriefCEEMEABank Of England (BOE) Market NewsPolicy StoryUKStoryRegion
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