EEF, the manufacturers organisation has welcomed today’s decision to hold interest rates again and believes the Bank of England can afford to continue its current stance for some time as the threat of high inflation remains muted.
In particular, EEF believes that continued healthy growth in productivity in manufacturing and in the rest of the economy means that even in a tighter labour market, higher wage costs should not be a problem.
EEF Chief Economist, Steve Radley, said:
“With unit wage costs falling in manufacturing and barely rising in the rest of the economy, the labour market is unlikely to generate higher wage inflation. Rising productivity provides the perfect excuse for MPC inactivity.”