[ad_1]
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it’s investigating the financials of Elon Musk’s pro-Trump PAC or producing our latest documentary, ‘The A Word’, which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.
The Bank of England is expected to keep interest rates unchanged this week after a surge in wage growth that will have officials at the central bank worried about long-lasting inflation.
Pay packets are now growing at 5.2 per cent, up from 4.9 per cent three months ago, according to data from the Office for National Statistics.
Rising wages can feed into inflation as people spend more, and the Bank uses higher borrowing costs to keep prices from rising. There had been speculation that rates would be cut this week, which would assist borrowers and those with mortgages. Public sector wage growth fell to 4.3 per cent from 4.7 per cent. The gain was fuelled by the private sector.
Gora Suri, economist at PwC UK, said: “Despite the considerable disinflation we have seen in the UK economy over the last two years, these underlying inflationary pressures remain.
“This means that the Bank of England is highly likely to keep interest rates on hold at its next meeting on Thursday, before resuming rate cuts in the new year.”
The Bank of England’s Monetary Policy Committee will announce its next decision on interest rates on Thursday 19 December.
Money market traders have pushed back their expectation of a rate cut to May. Previous market activity suggested that a cut could have come in March.
Instead, it is likely to stay at 4.75 per cent after it was cut from 5 per cent in November.
The strong gains in wages came as new data showed that the number of vacancies fell by 31,000 to 818,000 in the three months to November and the number of people on payrolls in the UK fell by 35,000 to 30.4m between October and November.
Sara Pineros, Economist at the Centre for Economics and Business Research (Cebr) said: “Vacancies declined for the 29th consecutive period and the unemployment rate increased to 4.3 per cent, higher than both a year ago and during the previous quarter.
“These developments reflect the continued softening of the labour market, which has been driven by tighter interest rates and the wider loss of momentum in the economy. Despite these weaker labour market conditions, Cebr expects the Bank of England to keep interest rates on hold at this week’s meeting.”
Central banks typically use interest rates as a way to cut inflation since costlier borrowing reduces demand.
The Bank of England raised interest rates to 5.25 per cent last year, taking them to their highest rates since before the great financial crisis of 2007-8. It then cut lending rates to 5 per cent in August of this year.
Commercial lenders use the bank base rate as a guide on how much to charge borrowers and how much to reward savers.
Mortgage borrowers’ troubles began two years ago in the aftermath of Liz Truss’s disastrous mini-Budget, when her unfunded tax cuts sent shockwaves through financial markets and almost overnight mortgage costs rose.
The average two-year fixed-rate mortgage went from 3.66 per cent to 5.24 per cent, according to mortgage brokers London & Country.
[ad_2]
Source link