Slowdown in wage growth ‘clears the path for more interest rate cuts’ by BoE this year

Get the free Morning Headlines email for news from our reporters across the world Sign up to our free Morning Headlines email Please enter a valid email address Please enter a valid email address SIGN UP I would like to be emailed about offers, events and updates from The Independent. “This lends some support to our forecast that the Bank of England will press ahead with two more 25bps interest-rate cuts later this year.” The statistics agency also said that the rate of unemployment was 4.2 per cent over the three months to June, dropping from 4.4 per cent over the previous three months. We still think the Bank will pause in September before pressing ahead with two more 25bps rate cuts in November and December.” However, the National Institute of Economic and Social Research said that while wage growth is slowing, it remains strong, and it could cause the Bank to rethink imminent interest rate cuts. “However, the persistence of strong wage growth also raises concerns about stickier inflation, which may prompt the Bank of England to remain cautious about further interest-rate cuts. We expect wage pressures to continue falling gradually in the coming months as the labour market cools, with unemployment rising relative to vacancies.” The Bank raised interest rates to a 16-year high of 5.25 per cent last year to battle soaring inflation, and only cut by a quarter-point drop at the start of this month to 5 per cent.