Wage growth in the UK falls to a two-year low and is expected to help the Bank of England cut interest rates

The Zhitong Finance App learned that in the summer of this year, the UK wage growth rate fell to its lowest level in more than two years, indicating that inflationary pressure has eased. This makes it possible for the Bank of England to cut interest rates again this year. According to data released by the UK Office for National Statistics on Tuesday, the average wage in the UK for three months excluding dividends increased 4.9% year-on-year in August. This is the smallest increase since the second quarter of 2022, in line with market expectations, and lower than the previous value of 5.1%.

Although wage growth is still above the Bank of England's satisfaction, it has slowed enough to allow the Bank of England to begin adjusting interest rates beyond the restricted range. The Bank of England cut interest rates in August for the first time since the pandemic. The market already has basic pricing. The Bank of England will cut interest rates again next month.

Bank of England Governor Bailey said at the beginning of this month that if inflation remains low, the central bank may be more aggressive in cutting interest rates. Bailey said he was encouraged by the fact that the pressure on the cost of living did not last as long as the Bank of England feared. Bailey pointed out that if the news on inflation continues to improve, the Bank of England may become “more aggressive” and “more active” in cutting interest rates.

Meanwhile, data showed that the UK unemployment rate in August (according to ILO standards) fell to 4%, lower than market expectations of 4.1%, a record low; the number of people employed in the UK's ILO increased by 373,000 in August, significantly higher than the 250,000 expected by the market. However, given the problems faced by the UK Office for National Statistics in gathering survey feedback, economists are urging caution with this latest employment data.