In a note commenting on the minutes of the last Monetary Policy Committee meeting released yesterday...
In a note commenting on the minutes of the last Monetary Policy Committee meeting released yesterday, Gerrard chief economist Simon Rubinsohn says he does not now expect any rate rises until the year end.
This view reflects the trend of other economists to push the first rate rise further into the future, or possibly into next year.
Last week Britannia managing director Gerald Gregory said his firm was shifting its house view to a single rate rise by the end of the year from two previously.
Rubinsohn says the key to keeping rates low is slow wage inflation, despite ongoing calls for higher wages by public sector workers - a significant reason behind this week's big strike.
But those wage pressures are being counterbalanced by slow private sector wage rises, particularly becausee of the big cuts to bonuses last year and earlier this year.
Such bonuses traditionally skew the wage inflation picture.
Instead, sectors such as engineering are seeing some of the lowest wage increases since 1984.
Rubinsohn also says that despite more public sector jobs being created, these are likely soaking up labour with particular skills-sets, rather than poaching more private sector workers "who are not readily transferable to the former".
In regards to the reasons put forward by the MPC for not raising rates, i.e., continued economic weakness caused by uncertain corporate earnings, he says that until this situation changes there are unlikely to be any rate rises.
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