LONDON, Nov 11 (Reuters) – Bank of England policymaker Megan Greene said on Wednesday it was appropriate to “proactively tighten our monetary policy stance” to ward against the risk of wage growth getting stuck at higher levels and firms passing those costs on.
Writing in the Financial Times, she added that forward-looking measures suggested pay growth was likely to stabilise over the coming year at or above 3.5% — above the level that would be consistent with keeping inflation around 2%.
Listing the dynamics in the jobs market and wage growth, she wrote: “All of this suggests we don’t have as much slack as we thought and it may already have peaked.
“The risk of wage growth getting stuck at higher levels and firms passing those costs through is therefore greater, and it is appropriate to proactively tighten our monetary policy stance to lean against this.”
(Reporting by Kate Holton; editing by David Milliken)
