MNI BRIEF: UK Labour Market Easing Not Nearly Enough-Broadbent

The extent of the rise in UK wage growth to partially compensate for the hit to real incomes had been a surprise and that while labour market pressures have started to ease they need to soften a lot more, Bank of England Deputy Governor Ben Broadbent said Tuesday.

In a question and answer session at the National Institute (NIESR), Broadbent said ready reckoners had heavily under-estimated the acceleration in pay growth in response to the hit to real earnings and that the 5 percentage point rise in wage inflation was a shock. Looking at the data over the last three months "some of that pressure is beginning to come off, not nearly to the extent we need it to," he said. (MNI BRIEF: UK Wage Growth Adds To Upwards Rate Pressure On BOE)

He declined to term it a wage-price spiral but said that it "is precisely the reason we have been putting up interest rates." In other remarks he did not rule out a larger than 25bps rate hike, saying they would do what is necessary, and he refused to be drawn on how high Bank Rate would head.