- Mark Carney, BoE Governor
Britain's unemployment rate continues to fall, while the number of people seeking for unemployment allowances is set to decline below a million for the first time in six years. The Office for National Statistics reported the unemployment rate dipped to 6.4% in the second quarter, the lowest level since December 2008, down from 6.5% in May. U.K. employment rose in the three months to June to more than 30 million, up 1.5% from the same period last year, with total employment rate standing at 73%. However, average wages excluding bonuses increased 0.6% in the three months to June, the slowest pace since records began in 2001, while the average earnings index, including bonuses, declined 0.2%, marking the first drop since 2009. The Bank of England cut its outlook for average wage growth, as it now expects average salaries to inch 1.25% this year, underscoring wage growth has become its key indicator for determining when interest rates are likely to increase. Nevertheless, the central bank hinted that it stays on course to hike interest rates early next year, given wage growth in the country increases. Inflation is expected to hover around the 2% level over the coming two to three years as long as interest rates increase in line with the expectations in financial markets. The estimate for the amount of slack in the economy has been cut from 1-1.5% to 1%. The Pound weakened almost 0.5% versus the U.S. Dollar following the release of the Inflation Report.
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