News Column

Bank Of England Lowers Wage Growth Forecast

August 13, 2014

LONDON (Alliance News) - The Bank of England reduced its wage growth estimate and reiterated that the increase in interest rate will be gradual.

"In light of the heightened uncertainty about the current degree of slack, the committee noted the importance of monitoring the expected path of costs, particularly wages, the BoE said in its quarterly Inflation Report.

As slack has been absorbed, financial market expectations of the date of the first Bank Rate rise have moved forward, it said. But when Bank Rate does begin to rise, the pace of rate increases is expected to be gradual, with rates probably remaining below average historical levels for some time.

Governor Mark Carney said the amount of slack in the economy is around 1% of gross domestic product.

Inflation is close to the 2% target and is projected to remain close to the target in the period ahead, the bank said.

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Source: Alliance News

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