London, United Kingdom. British employers’ expectations for wage growth remained at their joint-lowest level in nearly four years in February, according to a Bank of England survey watched for signs of easing pay pressure ahead of future rate cuts.
Wage and price expectations
Expected year-ahead wage growth held at 3.6% on a three-month moving-average basis in February, the joint-lowest reading since the series started in 2022, according to the monthly Decision Maker Panel survey published this week.
Companies’ expectations for raising their own prices over the next 12 months edged down by 0.1 percentage points to 3.4% in the three months to February.
Staffing outlook
Companies said they expected to expand staffing levels by 0.1% over the coming year.
Interest rate context and market expectations
The central bank is closely monitoring wage growth to assess remaining inflation pressure in the economy and is expected to keep interest rates at 3.75% this month after holding them in February.
Investors trimmed bets on Bank of England interest rate cuts this week and are pricing in one quarter-point cut this year as the US-Israeli war on Iran continued to stoke fears about inflation.
The Bank of England survey was conducted before the most recent Middle East conflict started.
How do you expect wage and price pressures to affect the Bank of England’s next interest rate decision?