BoE Governor Andrew Bailey expressed his concern regarding the tight labour market in the UK during a hearing at the House of Lords Economics Affairs Committee today. His comments followed the release of data showing stronger than expected wages growth.
Commenting on the situation, Bailey said, “As I’m afraid this morning’s numbers illustrated, we’ve got a very tight labour market in this country.” He also added, “We’ve had a fall in the supply of labour, which is showing signs of recovering, but very slowly, frankly.”
On a similar note, MPC member Catherine Mann voiced her concerns, noting “wage increases of 4.0% would be a challenge to returning CPI to 2.0%.” She also flagged services price inflation as a potential hindrance in achieving the 2% CPI target.
Mann stated, “Drop in inflation expectations was important for me to switch my vote to a 25 bps rate hike from 50 bps.”
