BoE survey shows UK wage growth expectations at 3.6 percent
UK firms expect wage growth to hold at 3.6% while price hike plans cooled in February. The data comes as the Bank of England weighs future interest rate cuts.
British employers in the United Kingdom maintained their wage growth expectations at a joint-lowest level in nearly four years this February. According to the Bank of England's monthly Decision Maker Panel survey, expected year-ahead wage growth held at 3.6% on a three-month moving-average basis, a level matching the lowest reading since the series was established in 2022.
The central bank is closely monitoring these figures as it searches for definitive signs of a slowdown in pay pressure before considering a reduction in interest rates. Currently, rates are held at 3.75%, following a period of stability in February. In addition to wage trends, the survey showed that companies' expectations for price increases over the next year edged down to 3.4%, a decrease of 0.1 percentage points from previous readings.
Employment trends remain conservative, with firms projecting a modest 0.1% increase in staffing levels over the next 12 months. Meanwhile, broader geopolitical factors are influencing market sentiment. Investors have scaled back their expectations for rate cuts, now anticipating only one quarter-point reduction this year. This shift comes as the conflict involving the United States and Israel against Iran continues to fuel concerns about inflationary pressures.
The Bank of England noted that the data for this survey was collected before the most recent developments in the Middle East conflict began to impact global markets.
