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Interest rate cuts more likely after Bank of England data shows slowing wage growth - DAILY EXPRESS

JUNE 07, 2024

Wage growth is expected to fall by 1.5 percentage points over the next 12 months according to the Bank of England, strengthening the case for rate cuts this summer.

According to data from the Bank's decision maker panel, which surveys the finance chiefs of small, medium and large businesses, employers believe that their wage bills will grow by 4.5 percent over the course of the year ahead. That compares to the six percent annual wage growth they reported last month.

Aside from falling wage inflation expectations, the Bank's DMP data also showed businesses believe that output price inflation will drop from 4.9 percent to 3.9 percent over the coming 12 months. It also found that they expect the rate that their unit costs increase by to slow from 6.2 percent to 5.4 percent.

Exterior of the Bank of England© Getty

Wage growth is one of the key inflationary factors that the Bank's Monetary Policy Committee considers when making its interest rates decisions. The fact it is expected to fall, along with other drivers of inflation, means that a rate cut is likely in August, according to economists.


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