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MNI BRIEF: Rise In U* Means Higher-for-Longer - BOE Haskel

(MNI) London

The rise in U*, the equilibrium, or non-inflationary, jobless rate means that the Bank of England's policy rate will have to stay high-for-longer, Monetary Policy Committee member Jonathan Haskel said at a King's College BOE Watchers conference Friday.

On Thursday, the BOE revised up its estimate of U* to 4.5% from around 4.1% but Haskel on Friday published estimates suggesting it could be as high as 6%. "Do I believe the equilibrium rate is 6%? No I don't .. it's an upper bound," Haskel said when questioned on the estimate but he added that a higher equilibrium rate does mean the policy will have to be higher for longer.

Haskel said one reason for a higher U* was that job matching had deteriorated, with a greater discrepancy between skills and vacancies. Recent data, however, has shown vacancies coming down fairly rapidly, suggesting some of the tightening in the labour market is now reversing.

MNI London Bureau | +44 203-586-2223 | david.robinson@marketnews.com
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MNI London Bureau | +44 203-586-2223 | david.robinson@marketnews.com
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