Carney Says Firming of U.K. Labor Market Remains on TrackBy
Bank of England Governor testifies to House of Lords panel
Carney sees prospect of return to real wage growth this year
The U.K. labor market is tightening, according to Bank of England Governor Mark Carney.
Employment is at a record high, private-sector earnings are stirring and there is a higher participation rate, Carney told the House of Lords Economic Affairs Committee on Tuesday.
“The firming of the labor market and the pickup in wages over the course of the next few years appears to be on track,” Carney said.
With inflation set to subside this year, ”there is a prospect of a return of real income growth later this year,” he said.
The policy debate over when to raise interest rates again centers on the amount of slack remaining in the labor market, and some say there’s only a limited margin now with unemployment at its lowest rate since 1975 and surveys pointing to growing recruitment difficulties.
The BOE will announce its next policy decision on Feb. 8, alongside new growth and inflation forecasts as well as an analysis of the supply side of the economy.