ING: UK Jobs Data Reduce Inflation Risks, Rates to Remain Steady

According to ING economist James Smith, recent UK jobs data show a cooler labour market and weaker wage dynamics, reducing the risk of another inflation surge. The private sector wage growth is now aligning with the Bank of England's 2% inflation target.

The job market has cooled significantly since the Ukraine shock four years ago, which means that severe second-round effects on inflation from higher energy prices are less likely. This view is becoming increasingly popular among the Bank of England's doves.

While a rate hike cannot be ruled out later this year if energy prices stay high, ING expects another 6-3 vote to keep rates on hold this week and into next year.