UK wage growth and services inflation too high for rate cut, BOE’s Greene says
BRITAIN’S latest wage growth and services price inflation data is too high for the Bank of England to consider cutting interest rates, BOE policymaker Megan Greene said on Thursday (Apr 18).
“The numbers that we’re seeing in terms of wage growth and services inflation just aren’t consistent with a sustainable 2 per cent (consumer price) inflation target,” she said during a discussion hosted by the Atlantic Council think tank in Washington.
Last week Greene wrote that interest rate cuts in Britain remained “a way off” because of persistent inflation pressure, and that she expected the BOE to cut interest rates by less than the US Federal Reserve would this year.
Asked again how soon a rate cut might come, Greene said: “I don’t think it’s imminent.”
“I just want to wait and see more progress in the direction that we’re looking for before I feel confident in cutting rates,” she added.
Financial markets currently price in a first quarter-point BOE rate cut for August or September, and see a roughly 50 per cent chance of a second quarter-point move before the end of 2024.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Official data this week showed British consumer price inflation dropped to 3.2 per cent in March from 3.4 per cent in February, a slightly smaller decline than the median expected in a Reuters poll of economists.
Annual services price inflation edged down to 6 per cent in March from 6.1 per cent.
Greene reiterated the BOE forecast that inflation would return to its 2 per cent target in the second quarter of this year but then rise again towards the end of the year.
Separate figures on Tuesday showed wage growth excluding bonuses in the three months to the end of February fell less than expected to 6.0 per cent from 6.1 per cent in the three months to January. REUTERS
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
International
German manufacturing downturn eases in April, PMI survey shows
India RBI's FX intervention eases as conditions turn favourable for rupee
Swiss inflation accelerates faster than expected in April
OECD upgrades global growth outlook as US outperforms
US official urges China, Russia to declare only humans, not AI, control nuclear weapons
Banking giants race to Riyadh as MBS steps up pressure campaign