Britain’s unemployment rate and wage growth have shown signs of easing, according to official data released on Tuesday. This development has solidified analyst expectations that the Bank of England (BoE) may cut interest rates in its upcoming meeting next month.
The unemployment rate fell to 4.0 percent, down from 4.1 percent in the three months ending in August compared to the previous three months, as reported by the Office for National Statistics (ONS). Additionally, the annual growth in employees’ average regular earnings decreased to 4.9 percent, marking the lowest level in over two years.
Ashley Webb, a UK economist at Capital Economics, noted that this report adds further support to widespread expectations that the Bank of England will lower interest rates from 5.0 percent to 4.75 percent during its next policy meeting in November.
At the BoE’s last policy meeting in September, the decision was made to refrain from consecutive cuts to borrowing costs. However, in August, the bank had reduced its key rate for the first time since early 2020, bringing it down from a 16-year high of 5.25 percent as inflation began to normalize.
The ONS is set to release Britain’s latest inflation figures on Wednesday, with expectations that the annual inflation rate will fall below the BoE’s target rate of 2.0 percent.