The further fall in the unemployment rate to within a whisker of the pre-pandemic rate will only encourage the Bank of England to raise interest rates on Thursday, probably from 0.50% to 0.75%, despite the coming extra hit to households’ real incomes from the war in Ukraine. What’s more, we think a low unemployment rate and high wage growth will prompt the Bank to raise rates to 2.00% next year.
Bank of England Drop-In (17 March, 10:30 EST/14:30 GMT): The MPC has a tricky decision to make at its March meeting. Join Paul Dales and Ruth Gregory for a discussion about the outcome and the path ahead for UK growth, inflation and policymaking. Register here.
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