Central Bank Deputy Governor Dave Ramsden said wage increases could slow down the pace of the Bank of England’s base interest rate cuts.
His comments were 4.7% after private sector wage growth accelerated to 6.2%, according to official data.
This makes private compensation grow at a rate three times the bank’s 2% inflation target.
“It’s about my development for me,” Ramsden said at Stellenbosch University near Cape Town.
“I no longer think the risk of sustainably reaching the 2% inflation target in the medium term is unfavorable.
“Instead, I think they are two-sided and reflect more inflation and the potential for inflation.”
His comments were posted on the bank’s nine monetary policy committees (Ramsden sat there) lowered the base interest rate by 0.25% to 4.5% earlier this month, a sign that the UK economy is struggling.
Bank of England Governor Andrew Bailey said it would take a “gradual, cautious” approach to reducing tax cuts, which many in the city believe means cuts at least twice this year.
The committee also predicts that 3% inflation will now rise to 3.7% in the third quarter of this year.
Goldman Sachs analyst Sharon Bell said Britain has laid off employees, raising prices and paying more since Prime Minister Rachel Reeves’ budget in October.
“This trend to raise prices, along with higher energy costs and VAT on school fees, has raised headline inflation,” Bell added in an investor note.
Rumsden also pointed out that the threat of global tariff war triggered by US President Donald Trump is a new factor in certainty.
“The next steps around the current U.S. government taking in tariffs and potential actions in other countries are centered around uncertainty.
“At present, we do not have any specific information to build our predictive model. However, it is clear that uncertainty in global trade policy has increased.”
Ramsden voted to most monetary policy committees to lower bank interest rates this month. Two MPC members, Swati Dhingra and Catherine Mann, voted to cut 0.50%.
But at its last meeting in December, Ramsden was part of a poor minority who voted for a 0.25% cut when the majority committee wanted to put interest rates on hold.
Earlier this week, Dhingra said that Bank of England policymakers were fighting for whether “gradual” base rate reduction should be limited to one base rate every three months.
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