According to market expectations, the latest data indicate that the Bank of England may reduce interest rates at its upcoming meeting in February.
Annual growth in employees’ average earnings for both regular pay (excluding bonuses) and total pay (including bonuses) in Great Britain increased to 5.6% during the period, up from 5.2% in the previous three-month period, according to data published by the Office for National Statistics (ONS).
Following the release of the data, Capital Economics noted that while the further rise in regular private-sector pay growth in November might cause the Bank of England some unease, it would take comfort from the continued loosening in labour market activity.
“We still think the Bank of England will cut interest rates at the next meeting in February, from 4.75% to 4.50%, and continue to cut rates gradually thereafter,” Capital Economics stated.
The pound fell against the dollar after the data release, dropping 0.6% to $1.2250.
“…today’s data won’t move the dial too much for the MPC heading into the December decision. Wage growth was broadly in line with the MPC’s (Monetary Policy Committee) expectations. And despite some further loosening in the labour market, the MPC will likely want to wait for more data before pushing through another rate cut,” Deutsche Bank’s Chief UK Economist Sanjay Raja said.
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