Bank of England is Expected to Raise Rate Next Month
Ian McCafferty, a member of the Bank of England's Monetary Policy Committee, said the central bank should not postpone an increase in interest rates, indicating the possibility of a faster wage increase and the recent strong growth of the global economy. According to the politician, wage growth may prove to be stronger than expected, putting pressure on inflation. The BoE raised rates for the first time in more than a decade in November, saying that Britain, while growing more slowly than other rich countries because of the impact of the 2016 Brexit vote, was more prone to inflation than in the past.
Last month, the head of the Bank of England, Mark Carney and his colleagues surprised the markets, saying that the rate of growth rates could be higher than expected, due to a strong global economy and an inflation rate that exceeds the target. Most of the economists suggest that the Bank of England will increase borrowing costs from the current level of 0.5% at a meeting in May.
Another sign that the Bank of England will raise rates in May is data on the restoration of wage growth in Britain. The growth in basic wages accelerated to 2.6% in November-January, while the level of employment returned to a record high. The unemployment rate fell to 4.3%, which corresponds to a minimum since 1975, compared with 4.4% in October-December 2017.