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

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.