Agencies
London
Bank of England policymaker Jonathan Haskel said on Monday that he does not want to cut interest rates from their current 16-year high as inflationary pressures remain in the job market and it is unclear how rapidly they will fade.
Financial markets currently price in a roughly 60 percent chance that the BoE will cut interest rates on Aug. 1 for the first time since 2020, but Haskel stuck with his position as one of the policymakers who is more cautious about looser policy.
“The labour market continues to be tight, and I worry it is still impaired,” Haskel said in the text of a speech which he is due to deliver in person later on Monday.
“I would rather hold rates until there is more certainty that underlying inflationary pressures have subsided sustainably,” he added.
British consumer price inflation returned to the BoE’s 2 percent target in May for the first time since 2021. But the BoE expects it to rise later this year due partly to wage growth which remains close to 6 percent- roughly double the rate most policymakers view as consistent with 2 percentinflation.
Haskel is the first BoE policymaker to speak since the conclusion of Britain’s election campaign, which brought a blackout on BoE communications.
Britain, alone among major advanced economies, still has a lower percentage of working age people in employment than before the pandemic, and Haskel said the job market appeared not to be matching potential workers with vacancies as well as before.
Inflation also faced upward pressures due to the public’s recent experience of unusually rapid price growth - which hit a 41-year high of 11.1 percent in October 2022, Haskel said.
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“I hope this helps explain why the MPC is looking closely at labour market conditions and underlying inflationary indicators such as services inflation,” Haskel said.
