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Bank of England official: Wage pressure may continue for several years

2024-08-14

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According to foreign media reports, Catherine Mann, a monetary policy committee member of the Bank of England, warned on the 12th that prices of goods and services are expected to rise again, and the pressure of rising wages may take years to dissipate.

The Bank of England recently announced a 25 basis point cut in its base rate to 5%, but this rate cut does not necessarily mean the beginning of a sustained easing policy by the Bank of England. The rapid rise in wages and continued high inflation in the service sector have made some members of the Bank of England wary of rate cuts. Mann has consistently voted in favor of tightening policy in the Monetary Policy Committee and voted against the rate cut at the interest rate meeting.

Mann warned that the fight against inflation should not be considered over after a short-term decline in the Bank of England's headline inflation gauge. Mann said that although the main indicator remained at the central bank's 2% target in June, she was still concerned about the upside risks to inflation. She said that prices of goods and services could rise again and that it could take years for wage pressures to dissipate.

Mann added that some businesses were seeking to match price increases with rivals, while strong demand meant they were not in a rush to pass on lower costs from the stronger pound to consumers.

The survey showed businesses still expected relatively large rises in both wages and prices in the UK. "What that means to me is that I'm now looking at problems for next year," Mann said.

Britain's Labour government said it would continue a target achieved by the Conservatives last year of keeping the minimum wage at two-thirds of median income, one of the highest in the world.