UK: Labour Market Keys Open BoE Doors
133 Views, 18 Jan 2022 21:52
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- UK unemployment continued to decline after furlough. Activity levels are low and falling, but the 4.1% UR implies capacity as tight as when the BoE hiked to 0.5% in Nov-17.
- A hike in Feb-22 now appears likely, barring imminent news. Vacancies and wage growth have fallen back to 2019 levels, supporting the Bank rate’s return to 0.75% later this year.
- The cautious policy outlook in 2019 carried the gradual and limited mantra, contrary to current fears of aggressive tightening.