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UK Interest Rates Will Rise if Wages and Productivity Fail to Match Says BoE Official

The Bank of England deputy governor has warned that the central bank will be forced to hike interest rates soon if wages fail to increase in tandem with productivity.
According to Nemat ‘Minouche’ Shafik, in an interview with the Yorkshire Post newspaper, the central bank will have to bump up rates from its record low of 0.5% in order to stimulate pay packets.
“If wage increases are expected, but productivity is performing well we can wait for longer; if those wage increases are not accompanied by productivity increases, then I think we will have to move more quickly on rates because inflationary pressures will build up,” said Shafik.
“I think that’s the key choice that we face.”
The UK economy is growing faster than expected at 3.2% but wages are still moving up at a slower rate compared with inflation.
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