Surging wages raise chance of early interest rate hike

Official data reveals that pay rose by 2.7% year-on-year in the quarter to April, stronger than the 2.1% that had been expected and the fastest pace of growth since December 2008. Economists believe the pace of the increase might actually be closer to 4%. Minutes of the June meeting of the Bank of England's Monetary Policy Committee show that MPC members expect wages will continue to rise quickly. RBS analysts said the strength of the April wage data and the 'hawkish' tone of the June MPC meeting could steer markets towards expecting a rise in interest rates before the end of the year. Suggestions that the BoE could move towards raising interest rates buoyed the pound around 0.7% higher against the dollar.


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