Struggling to do nothing

14 June 2017 By Swaha Pattanaik Follow @swahapattanaik

Governor Mark Carney is not raising rates in response to a spike in inflation since it’s probably temporary and wages remain subdued. However, Britain’s fragile government will probably loosen fiscal policy. Though bond yields remain low, investors are showing signs of nerves.

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British average weekly earnings excluding bonuses rose 1.7 percent in the three months to April compared with the same period a year earlier, the UK statistics office said on June 14. Wages including bonuses rose 2.1 percent.

After adjusting for inflation, earnings excluding bonuses declined 0.6 percent from a year ago while total pay, which includes bonuses, fell by 0.4 percent, the biggest drop since 2014.

Britain’s inflation rate unexpectedly jumped to 2.9 percent in May, its highest level in nearly four years, the UK statistics office said on June 13.

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