Economists predict November cut to UK interest rates after wage growth slows ? business live
08.40 CEST Economists: November interest rate cut looks likely after wage growth slows
Several economists are predicting that today?s slowdown in pay growth will encourage the Bank of England to cut interest rates at its next meeting in early November.
Following the news that regular wage growth across Great Britain slowed to 4.9% in June to August, down from 5.1% a month ago, Ashley Webb, UK economist at Capital Economics, says:
The further fall in wage growth in August, together with some signs that the labour market continued to loosen gradually, adds further support to widespread expectations that the Bank of England will cut interest rates from 5.00% to 4.75% at the next policy meeting in November.
Luke Bartholomew, deputy chief economist at abrdn, says that ?for now, another interest rate cut in November looks nailed on?, explaining:
?The labour market report is unlikely to move the dial much on interest rate expectations. Wage growth continues to gradually moderate, but still needs to come down further to be fully consistent with the Bank of England?s target.
As flagged in the introduction, a cut in November was already seen as an 83% chance. This morning, it?s inched up towards 85%.
Monica George Michail, associate economist at NIESR, says:
Easing wage pressures are supported by a notable fall in services sector pay growth, which recorded 3.6 per cent, down from an average of 5.6 per cent in the first half of this year. This is positive news for inflation and might provide the Bank of England with increased confidence regarding interest rate cuts?.
This time tomorrow we?ll be digesting the latest CPI inflation data, which will also have a significant impact on the Bank?s decision next month.
Kyle Chapman, FX markets analyst at Ballinger Group, says:
