Just 50bps of BoE rate cuts this year amid strong wage growth numbers

This week’s jobs data confirmed that Britain’s labour market is continuing to hold up quite well, despite the uncertainty created by the tariffs and rising business costs.

While we are no doubt seeing signs of a slowdown (the jobless rate edged up as expected to 4.5% and payrolled employees dropped by 33k), we are not seeing a complete disintegration in labour market conditions, and wages continue to grow at a strong pace in excess of 5% (5.5% including bonuses).

Two Bank of England officials have struck a hawkish note during remarks so far this week. Both Deputy Governor Lombardelli and external MPC member Greene said on Monday that their decision to vote in favour of a 25bp cut last week was finely balanced, with both warning that UK inflation remained too high.

This week’s wage data will have done little to change this view, and market pricing for just 50bps of MPC cuts this year appears appropriate.