Bank of England Takes Stand Against Inflation
- Market prices indicate that there will be two more interest rate hikes by the end of the year
Looking ahead: Bank boss Andrew Bailey
The Bank of England finds itself standing alone in its efforts to combat inflation.
Just a day after the Bank raised interest rates to 5.25%, the highest level in 15 years, data from the US showed an addition of 187,000 jobs last month. Although slightly up from the 185,000 added in June, it fell short of the predicted 200,000.
The declining job numbers are seen as a positive sign that the American labor market is cooling, which will help curb inflation.
The Bank of England’s chief economist, Huw Pill, warned that a surge in food and energy prices could lead to further interest rate hikes in the UK.
Markets have already priced in two more rate hikes by the end of the year. This differs from the US, where the Federal Reserve is expected to keep rates steady at 5.25%-5.5% in its upcoming rate-setting committee meeting.
Despite the decrease in job additions, American workers continue to experience strong pay growth, with hourly earnings rising by a better-than-expected 4.4% year-on-year.
Unemployment also dropped to 3.5% from the previous month’s 3.6%.
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