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23 Feb 2016
Next interest rate move will be up – BOE’s Shafik
While testifying on inflation and the economic outlook before Parliament's Treasury Committee, Bank of England (BOE) deputy governor Shafik noted that wage growth will accelerate if the labour market continues to tighten.
Key Quotes:
If labour market continues to tighten, expect wage growth will pick up
Difficult to predict timing of wage pick-up
Believes next interest rate move will be up
Once that uncertainty has dissipated, expect the economy to warrant a path for bank rate that increases more quickly than implied by the market yield curve
Must be willing to be flexible to respond from surprises from world economy, financial markets
Exceptionally low level of long-term rates can be expected to unwind as global growth recovers
Have judged it appropriate to refrain from voting for rate hike until convinced wage growth sustained at level consistent with inflation target
Would ordinarily expect wages to grow about 2-3% more quickly than productivity growth in order to generate inflation at target
Key Quotes:
If labour market continues to tighten, expect wage growth will pick up
Difficult to predict timing of wage pick-up
Believes next interest rate move will be up
Once that uncertainty has dissipated, expect the economy to warrant a path for bank rate that increases more quickly than implied by the market yield curve
Must be willing to be flexible to respond from surprises from world economy, financial markets
Exceptionally low level of long-term rates can be expected to unwind as global growth recovers
Have judged it appropriate to refrain from voting for rate hike until convinced wage growth sustained at level consistent with inflation target
Would ordinarily expect wages to grow about 2-3% more quickly than productivity growth in order to generate inflation at target