Bank of England Expected to Hold Rates Despite Jobs Market Weakness
The Bank of England is widely expected to keep interest rates unchanged at its next Monetary Policy Committee (MPC) meeting on Thursday, despite new data showing further signs of weakness in the UK labour market.
Market pricing suggests traders see less than a 1% chance of a rate cut this week, with policymakers still focused on tackling stubborn inflation rather than supporting employment.
Matt Swannell, chief economic adviser at the EY Item Club, said the Bank was likely to continue prioritising inflation control:
“There are few signs that inflationary pressures have eased, as businesses continue to pass on the rise in National Insurance contributions. While the MPC’s focus will now turn to the prices data, there are few signs that the jobs market is in need of immediate support.”
The consumer prices index (CPI) rose to 3.8% in July, with the latest inflation figures for August due tomorrow.
Rob Wood, chief UK economist at Pantheon Macroeconomics, added that the “stabilising labour market will keep the MPC on hold for the rest of the year.”
