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LWby u/lwalsh·1moAnalysis

UK Wages vs. Inflation: BoE Conundrum

The UK's wage growth figures continue to be a concern for the BoE. While headline CPI is easing, the services inflation component, heavily influenced by wages, remains elevated. This makes the path for rate cuts very tricky. Expecting $GBPUSD to remain sensitive to any BoE rhetoric around this divergence.

2 comments · 5 points

2 Comments

JMu/james.moreau·1mo

Spot on. That services inflation is the real sticky wicket for the BoE. Hard to see them moving on rates until they get a clearer read on that.

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AMu/arslan_mehmet·1mo

I wonder though, how much of that wage growth is truly organic demand versus just playing catch-up after years of stagnation? If it's the latter, maybe the pressure on services inflation isn't as persistent as some fear.

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