Bank of England governor Andrew Bailey warned the UK is already experiencing secondary inflation effects as higher prices caused by supply chain disruption and high energy costs have given way to price increases caused by employers needing to cover higher wage costs. The latest UK employment data shows the jobs market remains robust. The employment rate has ticked up slightly as some people who chose to stop working during the Covid pandemic return to employment. Wages continue to rise at a much faster rate than in recent years, as average private sector wages increased by 7%.
Last week, the Bank of England raised its forecast for inflation. It now expects inflation to remain above 5% this year and not to return to target until 2025. Andrew Bailey’s comments this week opened the way for further rate hikes as he promised the bank would raise rates as far as necessary to get inflation back to target. His comments contributed to a decline in gilts as the yield on 10-year UK government bonds rose to the highest level this year.
For the following stories, please click on this link*
- Property: Landlords see the bottom for tumbling office values
- Japan: Equities gain as economy grows quicker than expected
- Equities: Are equity markets too optimistic, or os the view of bond investors too bleak?
(*Please note, The contents of this e-shot been prepared for general information only. It does not contain all of the information which an investor may require in order to make an investment decision. If you are unsure whether this is a suitable investment you should speak to your financial adviser. This information is not guaranteed to be correct, complete, or accurate. FE Research is a division of Financial Express Investments Ltd, registration number 03110696, which is authorised and regulated by the Financial Conduct Authority (FRN 209967). For our full disclaimer please visit www.financialexpress.net/uk/disclaimer. Data Sourced from FE Analytics, and Bloomberg Finance LP.)