Policymakers row over chance of increase in wages this year

Tim Wallace
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BANK of England policymakers disagreed yesterday over the chance of a rise in wages over the coming months.

Martin Weale told MPs he voted for an interest rate rise last month because indicators suggest wages will rise soon.

He wants to start slowly raising rates before inflation shoots up as a result.

“I fear inflationary pressures are stronger than [the Bank’s] central forecast, that is why I voted the way I did,” he told the Treasury Select Committee.

Deputy governor of the Bank Minouche Shafik agreed with him that indicators suggested wages would rise soon – but she expressed little confidence in the forecasts, so voted to keep rates at a record low.

“All the indicators seem to point to the fact that wage growth is imminent, with an average of around 1.5 per cent,” the monetary policy committee member said.

“But those models have indicated this in the past and actual data has disappointed, so I think that even though the indicators anticipate it, that we have been disappointed in past made me feel it was too early to make the decision,” she added.