Bank of England's Weale says British jobs market 'fizzing', eyes rate hike

Britain's labour market is"fizzing away nicely" and wages are growing faster than expected, Bank of England policymaker Martin Weale said in an interview with the Financial Times in its Wednesday edition, indicating that he might soon vote for a rate rise. 

PHOTO: REUTERS

JUN 24, 20157:21 AM

[LONDON] Britain's labour market is"fizzing away nicely" and wages are growing faster than expected, Bank of England policymaker Martin Weale said in an interview with the Financial Times in its Wednesday edition, indicating that he might soon vote for a rate rise.

The FT reported that Mr Weale, a member of the BoE's Monetary Policy Committee who voted for rate rises last year, believed the central bank should be ready to raise rates as soon as August.

The FT did not directly quote Weale as saying this, but did report him saying that wages were now rising faster than he had expected they would when he had previously voted for a rate rise in the latter part of 2014.

"If you'd asked me last autumn how rapidly I thought wages might pick up, looking at the most recent numbers, the movement seems to have been a bit faster than that," he said. "Rather than ... fizzling out, the labour market ... is fizzing away nicely," he added.

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The BoE has identified wage growth as one key factor that will aid its decision as to when Britain's economic recovery is robust enough to support higher interest rates.

Most economists do not expect rates to rise until early next year. Ian McCafferty, the only other MPC member who backed a rate rise in late 2014, said last week that data would determine whether rates rose towards the end of this year or as late as June 2016.

Mr Weale dropped his call for higher rates at the start of this year, shortly before tumbling oil prices took British consumer price inflation to its lowest in more than half a century. "Obviously that gives you some breathing space," Mr Weale said, though the FT also reported that he said this time was coming to an end.

Mr Weale also criticised businesses which believed that a quarter-point rise in BoE rates from their record low 0.5 per cent would cause serious damage. "Not changing rates ever would have worse effects than adjusting interest rates to fit the economic circumstances," Mr Weale said.

REUTERS