(Reuters) -Bank of England Deputy Governor Dave Ramsden said on Monday that Britain’s jobs market had weakened and wage growth was normalising, leaving him confident that interest rates could be cut further and inflation would fall back to the BoE’s target.
“We have seen the labour market continuing to loosen with wage growth normalising and I see that as supporting a continuation of the core disinflation process. And that anchors my view on the inflation outlook,” Ramsden said in a panel discussion organised by the European Central Bank in Frankfurt.
Ramsden was one of seven members of the nine-strong Monetary Policy Committee who this month decided to keep the BoE’s benchmark Bank Rate on hold at 4% while the other two voted for a quarter-point cut.
Ramsden said Britain’s inflation pressures had been easing substantially until recently and, although households’ inflation expectations were high, the BoE’s forecast of a rise in consumer price growth to 4% in September was likely to prove a peak.
“I do remain confident that we’re going to get inflation back to target with the current setting of … interest rates which is still in restrictive territory, and also given the market expectations that we condition our forecast on,” he said in the panel discussion.
Governor Andrew Bailey last week reiterated his view that borrowing costs are likely to fall further but when and by how much depended on the path of inflation.
“I think the gradual and careful approach that the MPC have taken to removing policy restraint remains appropriate and I see scope for further removal of policy restraint looking ahead,” Ramsden said.
Another MPC member, Megan Greene, on Wednesday warned that inflation in Britain could prove stronger than the BoE has forecast and a cautious approach should be taken to further rate cuts.
(Writing by William Schomberg; editing by David Milliken)
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